Pound pares gains after second referendum made conditional to May’s Brexit deal

Prime Minister May’s highly anticipated speech saw cable surge before she took the stage on news she was ready to offer a second referendum.  PM May outlined 10 points, but markets primarily cared about the the vote for MPs on whether the deal should be subject to a referendum.

May’s final attempt in getting a Brexit deal passed will struggle to gain support from Labour.  May is offering the kitchen sink, and with a second referendum at stake, she is hoping that will appease Labour remainers.    If she is able to pull this off, she should not see much objection from the EU.

The problem for the PM is that her latest Brexit proposal is too late.  Too many politicians are eyeing her job and she will struggle to get enough votes.  Markets want to know if this will be a free vote on her deal, and will she whip against the deal being voted by the public.  A lot needs to go right for PM May’s deal and while she has made some meaningful concessions, it is unlikely to pass.

History does not bold well for a second referendum, with MPs voting 280 supporting a confirmatory vote and 292 against it.

The British pound has given back half of its earlier gains as markets learn that the second referendum was conditional on May’s deal passing.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya