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Brexit Update – Boris Johnson Returns from Europe and with very little

Bob Mason

The Trip to Europe

Boris Johnson completed his first set of visits to Germany and France thinking that he had done the impossible and prised open the door to EU renegotiations on Brexit.

German Chancellor Merkel spoke of a desire to prevent a no-deal Brexit ahead of talks and reiterated the sentiment during the talks on Wednesday.

There was also talk of turning around an alternative to the Irish backdrop issue within the next 30-days. While the markets took this as a positive step and a material difference from the signals sent from Brussels, it was Macron that was a greater concern.

Macron and Brexit

The French President stated on Thursday that the backstop was indispensable, suggesting that there is very little wiggle room for the British PM.

Macron attempted to justify his position on Brexit and hard-line taken since the outcome of the EU Referendum back in 2016.

Either way, leaving the door ajar was a far cry from a willingness to recommence negotiations or, better yet, remove the backstop altogether.

Whether ever happens, while Johnson seems intent on having the backdrop removed, the UK Parliament may have very different ideas.

Vote of no-Confidence

A lack of progress leaves the door open for Labour Party leader Corbyn to muster up the necessary support to avert a no-deal departure from the EU.

Corbyn’s plan, however, includes the Labour Party leader becoming caretaker Prime Minister, which is not the most favored solution. It may, however, be favored over a no-deal Brexit.

Talks are scheduled to take place between the Labour Party leaders and other party leaders and perhaps some Tory Party Rebels.

It may soon become clear that a vote of confidence may find support should Corbyn step aside. Any move of intent to avert a no-deal departure from the EU would be a material turn around.

Theresa May managed to fend off a vote of no confidence. Boris Johnson looks to be in choppier waters.

The Pound

While Pound rallied on Thursday, there’s still a long way to go until 31st October.

Corbyn will need to find the support of the smaller parties. He may even need the support of rebel members of the Tory Party to oust Johnson. That doesn’t reverse Brexit but would raise the stakes of a 2nd Referendum.

Members of Parliament have failed to deliver and so it may come down to another vote that seals Britain’s fate.

The uncertainty will remain, however, which is never a good thing for the Pound. There’s no guarantee that a 2nd referendum would yield a different outcome.

If the outcome is to leave for the 2nd time, where does that leave Britain? Theresa May’s deal or no deal at all?

At the time of writing, the Pound was down by 0.17% to $1.22297, partially reversing Thursday’s 1% gain.

This article was originally posted on FX Empire

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