Sterling hovers around $1.30 level
The pound is holding just above the $1.30 level in afternoon trading in London, after climbing above the threshold for the first time since May earlier today.
Sterling was recently trading up 0.2 per cent at $1.30 (almost exactly). If it holds that level through the New York afternoon, it will mark the highest fix in more than five months, according to Refinitiv data.
While Boris Johnson faced a setback in Saturday’s extraordinary sitting of parliament, analysts are increasingly marking down their assessment for the odds of a no-deal Brexit at the end of this month.
“Today, investors are back to guessing how the Brexit saga might finally unfold,” said Edoardo Campanella, economist at UniCredit in Milan. “This, however, does not seem to have dampened much of the optimism among investors that a deal-based Brexit will finally happen, as shown by the relative stability of the pound.”
Polish zloty and Hungarian forint winners from Brexit relief
Poland and Hungary are two of the biggest beneficiaries of easing concerns over a potential no-deal Brexit … at least if you ask currency traders.
The zloty and the forint have been the best-performing emerging market currencies this month, according to research from Piotr Matys at Rabobank in London. The former has risen 4.6 per cent against the dollar, while the latter is up 3.9 per cent.
Mr Matys notes that both the UK and Germany are key trading partners for the duo and are also of course two of the economies with the most to lose from a chaotic Brexit:
The main source of the impressive performance of zloty and forint is a market relief that a no-deal Brexit will be averted, at least for now. The UK is an important trading partner for Poland and Hungary. Both countries would have been not only directly impacted, but hard Brexit would have also negative implications for Germany, which is even more crucial for Poland and Hungary than the UK.
Brexit secretary: Government hopeful of fresh vote this week
The Brexit secretary said the government was frustrated by Saturday’s defeat in the House of Commons but hopes the Speaker will allow another go at the so-called meaningful vote this week.
Stephen Barclay told the House of Lords EU select committee on Monday afternoon that “it was frustrating for many of us on Saturday that we were not able to have the meaningful vote”.
He says the first issue the government is watching today is whether the Speaker, John Bercow, allows a government attempt to hold another vote later on Monday.
“Because these things are moving at a very quick pace we will take things one step at a time,” he said. “We hope the Speaker will enable the House to have a meaningful vote.”
Scottish court maintains judicial pressure on Johnson
The highest civil court in Scotland on Monday has kept alive a legal effort to ensure prime minister Boris Johnson abides by the law that forced him to seek a Brexit delay, writes Mure Dickie in Edinburgh.
The decision by three judges of the Edinburgh court’s higher inner house means continuing judicial pressure on Mr Johnson and implies continuing doubt about his willingness to accept any further extension of the UK’s EU membership.
The court this month suspended consideration of the case after assurances from government officials that Mr Johnson would abide by the Benn Act.
The act required the prime minister to seek a delay to the UK’s scheduled October 31 departure from the EU if he did not secure parliamentary approval for a withdrawal agreement or a no-deal departure by October 19.
Lord Carloway, the Edinburgh court’s lord president, said that, for reasons similar to its previous delay, the court considered the case should be continued until it was clear that the prime minister’s obligations had been “complied with in full”.
The date of a future hearing would be decided later, he said.
The FT’s law and policy commentator David Allen Green said the decision was the “worst possible result” for the government:
‘Dom’ is a reference to Dominic Cummings, the prime minister’s chief adviser. Read more of David’s thoughts on Twitter here.
Why the Withdrawal Agreement bill is awkward for the government
There are good reasons why the legislation has been kept under wraps: some of the details are a little awkward for Tory Eurosceptics, George Parker writes.
For example, some people may have forgotten that Mr Johnson’s deal includes a transition period, during which Britain remains in the single market, customs union and ECJ jurisdiction.
That means the WAB will reintroduce (temporarily) into British law a whole load of EU legislation that the government – with great fanfare – has recently repealed.
In August Brexit secretary Stephen Barclay signed with a flourish the repeal of the 1972 European Communities Act.
What to expect in parliament today
The FT’s political editor George Parker has an update on how things are likely to shape up in the Commons today:
• The Speaker will decide at about 3.30pm on whether to accept the “meaningful vote” proposal from the government to be put to the vote tonight.
• If John Bercow does accept it, the “rebel alliance” may well put down a Letwin-style amendment which would – in the words of No 10 – render “the meaningful vote meaningless”. In other words a repeat of Saturday. If that amendment was accepted by Mr Bercow, Downing St said it would immediately abandon the meaningful vote, to avoid another Saturday-style debacle.
• Meanwhile the government is expected to publish the Withdrawal Agreement bill later on Monday – the long-awaited detailed legislation that puts Mr Johnson’s Brexit deal – an international treaty – into British domestic law.
• MPs have never seen this legislation before, yet will be expected to give it a second reading – the big “in priniciple vote” – on Tuesday.
• Ministers are hopeful that the Withdrawal Agreement bill will get its second reading on Tuesday and then aim to pass it through all its Commons stages by the weekend. It would then pass to the House of Lords, with peers sitting through the weekend.
• A key moment is expected on Tuesday when MPs vote on a “programme motion”, which would give the government the ability to ram the legislation through parliament at breakneck speed ahead of October 31 exit day.
Germany does not rule out ‘short technical’ extension — reports
Heiko Maas says he hopes that MPs will vote on Monday to proceed with an orderly exit from the EU but that he doesn’t rule out a short extension to allow London more time to pass legislation.
“Should there be problems in Britain with the ratification, I would not rule out that there could be a short, technical extension,” Reuters reported the German foreign minister as saying.
I hope that the British lower house, showing the necessary responsibility, can take a decision on this today and that on the basis of this decision we will be in a position to achieve an orderly Brexit.
Should there not be a majority in the British lower house, then we in the European Union would have to look at whether there would then be a full extension – and only then would there be a decision about that.
Tusk consults with EU leaders on UK extension request
Jim Brunsden reports from Brussels:
A spokeswoman for the European Commission said that Donald Tusk “is now consulting leaders of the EU27” on Britain’s request to delay Brexit, adding that “it is first and foremost for the UK to explain the next steps”.
Asked about the implications of Boris Johnson’s decision not to sign the extension request, the spokeswoman said the lack of a signature changed nothing, because the request was made by the UK’s ambassador to the EU, Tim Barrow.
The spokeswoman also confirmed that the EU has launched its own ratification process of the Brexit deal (although the European Parliament has been clear that it will not vote until Westminster has approved the agreement).
Michel Barnier, the EU’s chief Brexit negotiator, will debrief MEPs this afternoon in Strasbourg and will update the EU commission’s leadership on Tuesday.
“We from our side will of course follow events in London very closely,” she said.
Government to introduce Brexit deal in Commons
Boris Johnson’s Brexit deal is to be introduced in the House of Commons today, following the setback on Saturday, according to parliament’s website.
The big outstanding question, though, is whether Speaker John Bercow will allow a second attempt at a “meaningful vote” after rejecting similar moves by Theresa May when she was prime minister. Westminster insiders see it as more likely that Mr Bercow will knock the measure down, and that Mr Johnson will push for a “second reading” of the measure on Tuesday, which will provide insight on whether or not he has the backing of a majority in parliament.
What’s on the docket: today’s Commons order paper
Sterling rallies as traders poised for next stage in Brexit process
The pound reversed earlier losses to rise about 0.2 per cent against the dollar and euro as traders weigh the next stage of the Brexit process in parliament.
Sterling, recently at $1.2995, went as high as $1.3010 in early morning trading in London. The move brings its advance against the dollar this month to about 5.8 per cent, putting it on track for its best month since May 2009 when it rose 9.4 per cent.
So, here’s where we are up to and what we have to look forward to
Boris Johnson will make another attempt to win parliament’s backing for his Brexit deal over the next few days.
• Parliament will meet at 2.30pm London time
• Jacob Rees-Mogg, leader of the Commons, will seek to hold another meaningful vote by MPs on the deal on Monday, but the Speaker, John Bercow, may not allow it to be debated
• Government insiders say a more likely route is the second reading of the withdrawal agreement on Tuesday: MPs will be asked to vote on whether they agree with the principle of Mr Johnson’s deal. If he wins this, Brexit is back on track
• Foreign secretary Dominic Raab said on Sunday that the government “appears to have the numbers” to secure parliamentary approval for the legislation
• Calculations by the Financial Times suggest he will win by a slim majority of five votes
• The prime minister lost a crucial vote on Saturday — 322 to 306 — which compelled him to seek a delay
• He wrote to Brussels last Saturday seeking a three-month delay to the Article 50 exit process
Sterling wavers as traders weigh Johnson’s next moves
Sterling was steady early on Monday after a Commons defeat at the weekend left Boris Johnson scrambling to push through his Brexit deal over the next few days.
The pound was little changed at $1.2973, recovering from falls in Asian trading. It was up 0.1 per cent against the euro at €1.162.
Monday’s muted market reaction came after MPs voted in the first Saturday sitting since 1982 to approve a measure that stripped Mr Johnson of a “meaningful vote” on the Brexit deal the prime minister had negotiated with Brussels last week.
Analysts and investors said the vote injected some uncertainty into the political situation in Westminster, with Mr Johnson now having to attempt to push through his legislation on either Monday or Tuesday. However, several City of London investment banks said it appeared Mr Johnson was on track to secure a majority on his deal.
“While developments over the weekend certainly puncture some of the prime minister’s political momentum, we think they also reveal that the PM can command a stable cross-party majority in favour of his Brexit deal,” said Sven Jari Stehn, head of Europe economics at Goldman Sachs. “The decisive test of that deal has been postponed by a few days; the deal has not been defeated.”
Malcolm Barr, economist at JPMorgan, said: “Our best guess at this point is that Johnson will secure a majority for the deal, even if not on Monday, and that attempts to graft a second referendum on to the bill will fail.”
He added, however, that “visibility on the exact path ahead is low, and the political situation is volatile”.
And we’re back…
Super Saturday was well … maybe not so super after all. Boris Johnson was defeated when MPs voted on a measure that deferred approval of his Brexit pact. While it was not the outcome the prime minister wanted, City analysts are fairly upbeat this morning on the prospects his deal will pass with a slim majority early this week.
The situation in Westminster will remain fluid, however, and as we’ve seen time and again, surprises seem to lurk around every corner.
We’ll be covering the story right here on this blog and on FT.com throughout the day – and potentially late into the evening.
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