16/01/2019 - Theresa May suffers defeat in Parliament

GBP

The Pound was volatile in the aftermath of Theresa May’s Brexit deal being rejected in Parliament. British lawmakers defeated the Prime Minister’s Brexit Withdrawal deal by a crushing margin of 432 votes to 202. The sheer scale of defeat makes it the worst for any Government in recent British history.

The loss was largely expected, but the margin of defeat was surprising, and has now led to worries of significant political upheaval. However the pound regained losses in the aftermath of the vote, as the timeline for an orderly exit will be extended and thus will give her more time to get a better deal.

Short term focus is now squarely on a confidence vote on May’s government by lawmakers later today. After the first British parliamentary defeat of a treaty since 1864, opposition leader Jeremy Corbyn called a vote of no confidence in May’s government, to be held at 7pm tonight.

The fear of a labour government has weighed on the pound in recent days, but DUP members and conservative rebels have said that they will support her.

EUR

The Euro fell on Tuesday after comments from ECB President Mario Draghi, who noted that recent economic developments had been weaker than expected. Recent economic announcements have been relatively poor and global uncertainty appears to behind this sentiment from Draghi. This was further highlighted when Draghi noted that a significant amount of monetary policy stimulus is still needed.

Key Announcements

09:30 – GBP: Core Consumer Price Index (YoY) (Dec); expected to remain at 1.8%
09:30 – GBP: Consumer Price Index (YoY) (Dec); expected to fall to 2.1% from 2.3%
19:00 – GBP: Parliament Vote of No Confidence