GBP. Brexit Hits a Speed Br-ump

The UK Supreme Court has ruled that the UK Government must seek Parliamentary authority to withdraw from the European Union and thus also to invoke Article 50.

The Government has been blindsided by this ruling one suspect, and PM May will not be amused. To invoke Article 50 will now require an Act of Parliament to be drafted and then passed by both Houses. I would expect a one liner Bill along the lines of “We the undersigned agree to Invoke Article 50 on the 31st of March 2017 to leave the European Union.” Things get interesting at this point though as delaying tactics such as amendments could be introduced and have to be debated by miscreant “remainer” MP’s throwing the end of March timeline into doubt.

The real complication though is the House of Lords. This Upper House is made up of appointed and hereditary Peers, i.e., they were not voted in. The House of Lords will, therefore, march to its own beat, and there are some anti-Brexit Peers. The lower house of Parliament is full of politicians. Politicians are elected and have generous allowances and a gold-plated pension scheme. But politicians can get fired by their voters in elections. A clear majority voted for Brexit meaning quid pro quo, those same voters may fire you and you will lose those lovely benefits if you put a spanner in the wheel.

So how will this play out? A very short bill will be introduced to Parliament and there will be a lot of noise and debate and attempted political skullduggery to derail it by a vocal minority. In the end however, a majority will think about their job security and the wishes of the majority of voters and fall into line passing it. The House of Lords is more of a wildcard. Logic says they will also huff and puff but won’t go against the will of the Lower House in the end. This is not a given though.

It does however throw the end of March timeline into some doubt even though I feel Article 50  will be invoked despite the Bre-moaners best efforts.

Markets don’t like uncertainty and GBP fell 100 pips as the announcement was made to 1.2440. The bounce back has been anaemic and we probably have a generally weaker USD to thank for the muted reaction. GBP has resistance at 1.2550 intraday with support at 1.2440 days low.

The 100-day moving average at 1.2415 is the first major support and long-term resistance lies at 1.2775.


This constitutional spanner in the works will be dealt with with a proverbial Ministerial sledgehammer. The Bremainers will stop being Bremoaners for a while. The Brexiters will be very Brangry and significant amount of uncertainty now will most likely mean GBP will struggle to make it past the aforementioned longer term resistance. I expect GBP will now dissolve into choppy headline-driven trading over the next month or so as battle lines are drawn in Britains House’s of Parliament.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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