Following Thursday’s (October 17th, 2019) announcement that the leaders of the European Union have approved the Brexit deal in the EU Summit, a wave of optimism was evident in the financial markets. Pound Sterling managed to hike close to the 1.30 level before the end of the week. The final decision was to come from the UK’s parliament when the deal was put up for voting on Saturday. Sources from the parliament, however, have highlighted that things weren’t all sunshine and roses in the House of Commons on October 19th, 2019.
Letwin Amendment Will Stir Up The Uncertainty In Financial Markets
The Democratic Unionist Party (DUP) leader, Ms. Arlene Foster, had already declared by the end of the last week that Northern Ireland will be voting against the deal. According to the recent news, the Letwin amendment has been passed in the House of Commons. Boris Administration will now have to request the European Union for a further extension with the amendment favored 322 to 306. As per the financial analysts, compliance with the Letwin Amendment stirs up the market uncertainty once more and can potentially hurt the Pound in the short and long run.
Following the proceedings of the UK’s parliament on Saturday, Prime Minister Boris Johnson has given an official statement that he has no intention of negotiating with the EU for a further delay. He was also reported to have stated that “meaning” from the much anticipated “meaningful” vote has been invalidated.
The members are now expected to vote on the Withdrawing Bill on October 22nd, 2019 (Tuesday). The coordinator for Brexit preparations, Mr. Michael Gove, had previously highlighted that in an event that the Letwin Amendment passes, there will no longer be a meaningful vote.
Letwin Amendment – A Brief Overview
Passage of the amendment requires the UK’s government to ask for a Brexit extension to the EU in case that the full Withdrawal Bill fails to get the majority vote by October 19th, 2019 (Saturday). Boycotting the meaningful vote, PM Johnson has expressed that he will vote only on the Withdrawing Bill (October 22nd, 2019).
The financial experts have opinionated that with Letwin amendment getting the major vote in the House of Commons, volatility in the financial markets, specifically in the GBP/USD pair with the start of the new week will return, with forecast for the currency pair to be under pressure. Provided that the Withdrawing Bill is passed on Tuesday, however, further upward rallies and a strong bullish pattern can be expected in the GBP/USD pair.