MPs voted to delay the vote until legislation implementing the deal can be passed, forcing the premier to request an EU extension to Article 50. This morning Number 10 demanded parliament be given “a straight up-and-down vote”, but the decision to grant Mr Johnson his “meaningful vote” fell to House of Commons Speaker, John Bercow who denied the motion this afternoon. Mr Bercow justified his decision, saying the deal had already been debated, and putting the “same matter” to MPs would be “repetitive and disorderly”.
This did little to stop the pound rising against the euro at the start of the week.
Think Markets’ Naeem Aslam gave her opinion: “Sterling experienced a small movement towards the downside on the initial statement by the Speaker. This confirmed that traders are patient and there is no panic in the market because the extension is widely expected.”
Meanwhile, opposition groups are hoping to add an amendment which would bind the UK to a customs union, and commenting on this, Morten Lund, strategist at Nordea Markets said: “The opposition will find it harder to filibuster the government agenda here and make an amendment for a customs union, which was seen as [a] way to obstruct the passing of the deal. It looks like, if they don’t get the customs union through, they might pass the deal. That’s why Sterling is moving higher.”
Meanwhile, the euro was left under pressure this morning as Bundesbank suggested the German economy may still be shrinking.
In its monthly report, the German central bank predicted GDP contracting during the third quarter, meaning the Eurozone’s powerhouse economy has fallen into a technical recession.
The bank stated that the recent slowdown across exporters is damaging Germany’s wider economy: “Germany’s economic output could have shrunk again slightly in the third quarter of 2019. The decisive factor here is the continued downturn in the export-orientated industry.”
Looking ahead, Brexit is likely to remain a catalyst for GBP/EUR exchange rate movement this week.
If the Prime Minister secures a vote in favour of his deal, or the EU grant an extension to Article 50 the pound is likely to rise as both outcomes would banish the spectre of an October no deal.