May hoping for cabinet sign-off on Wednesday
GBPUSD is rallying on Tuesday afternoon as various reports emerge that Theresa May’s endgame is in motion, with the cabinet due to meet on Wednesday to sign off on a Brexit deal.
While there is still numerous hurdles ahead, sign-off on Wednesday could be a hugely important step towards getting a deal over the line before Christmas and avoiding a disastrous no deal scenario. The pound is back above 1.30 on the news but the lack of an even stronger response is a clear reflection of the level of doubt that still exists that this deal will get over the line, even if it does get cabinet sign off which isn’t even guaranteed.
There are reports that May is planning to meet with cabinet ministers one on one this evening as she attempts to convince each of them to support the deal. This in itself could suggest that even she isn’t confident that she’s going to get the necessary backing. That said, it does suggest that an agreement has been reached between the UK and the EU on the backstop for the Northern Irish border, or a technical fudge of some kind that allows talks to progress to the future relationship.
Ultimately, the ability of sterling to build on these gains and gather some real momentum in the coming weeks hangs on May’s ability to convince her colleagues that this is the best deal on the table. Given how the last 21 months have gone, I think there’s plenty more bumps in the road ahead which will ensure this is anything but an easy ride.