Can the countdown to Brexit begin?

Great Britain will leave the European Union (EU) in 1 month. Or not? The allusions from British Prime Minister Theresa May and the vote in the House of Commons indicate that the chances of a Brexit delay are increasing rapidly.

Britain will leave the EU on Friday 29 March, although no one knows yet how that will happen, and whether it will even lead to a departure. That will not change as long as after each symbolic victory of May a hopeless defeat follows at moments that matter. However, she was able to enjoy a small boost on Wednesday 27 February: a majority of the House of Commons supported her approach to Brexit.

May had to make some concessions, including in terms of rights for European citizens in the country. In addition, the British House of Commons will have a veto option if there is no vote on an agreement on Tuesday 12 March. Although it is going a bit far to speak of a victory for May, given the proposal from Yvette Cooper (Labour Party). The proposal was almost an exact copy of the intentions that the prime minister had suggested at an international summit 1 day earlier.

Winner of the commotion
The Brexit commotion has one winner: the British pound. The chances of Brexit being delayed are increasing rapidly due to May's allusions. May will not succeed in getting her agreements with the EU through the House of Commons. On the other hand, her party is not in favor of a new referendum, which the Labor opposition is pushing for. As a result of the above, the pound has risen 1% against the euro since the turn of the year. Thanks to that increase, the currency has reached its highest level in more than 5 years.

However, it is not obvious that May will simply postpone the departure a few months. French President Emmanuel Macron has already said he will only agree to a delay if a hard Brexit is ruled out. The latter would provide a new stimulus for the pound. If you have plans for a weekend to London or another British city this spring, you should not wait too long. Not because Brexit makes it more difficult to cross the border, but because the rising pound threatens to make such a trip more and more expensive.

Joost Derks

Joost Derks is a currency specialist at iBanFirst. He has over twenty years of experience in the currency world. This column reflects his personal opinion and is not intended as professional (investment) advice.

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