Who will win the Brexit bluff poker game?

If no one intervenes, week 15 will end in a hard Brexit. Will British Prime Minister Theresa May still be able to force a solution? And will the European Union really play as hard as France, Spain and Belgium want?

Will Great Britain blow out of the European Union on Friday 12 April without proper agreements? The currency world has started to get a little concerned in recent days. On Wednesday, April 3, the pound nearly reached its highest level in more than 1,5 years, as May committed asked the European Union for an extension. In addition, May forced a breakthrough by collaborating with opposition Labor party. As a result, the value of the currency fell as optimism gave way to new doubts.

May is on the move
In week 15 it is May's turn again. If she manages to reach an agreement quickly with the opposition party, the House of Commons may still be able to vote on it before leaders in the European Union meet on Wednesday 10 April. However, that chance is small. In the House of Commons itself, the talks fell into the water at the end of last week. The hearing was suspended due to a leak.

A bigger stumbling block is the fact that it takes time for both sides to grow together. The opposition party leader also hinted that Prime Minister May hardly admits anything. She hardly has room for that, given she's inside her own party under tremendous pressure

European top
Although British politics has been full of surprises in recent days, there is a very good chance that the decisive turn will come at the European summit. The 27 European heads of government will meet on Wednesday 10 April to discuss Brexit. May will ask there if she will be given a postponement until Sunday 30 June. Germany is willing to listen to this, although France, Spain and Belgium have already indicated that their patience has run out. Without a new plan from Britain, they are only open to a short delay in preparation for a hard Brexit.

Finally, Donald Tusk, the President of the European Commission, prefers to see a long delay† Looking at the enormous financial costs of a hard Brexit and the souring of political relations, there is a good chance that May will be given more time. Even if that means Britain has to run for European elections in May.

How the emergency brake works
Even if the European Union chooses a hard line, there is a chance to avoid a chaotic departure. The House of Commons has already a law adopted against a hard Brexit. May announced Brexit on March 29, 2017, via Article 50. When 'Article 50' is repealed, Brexit will be over. This requires a majority in the House of Commons, and that was not successful last week.

After a repeal of 'Article' 50, new elections or a new referendum are the most likely scenario. However, before that happens, there is still plenty of room this week for all kinds of new twists regarding Brexit.

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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