Even Hulk won't derail Brexit

Prime Minister Boris Johnson has failed to sideline the British House of Commons. His blundering towards the October 31 deadline puts him at risk of taking the painful record of shortest-serving prime minister ever from George Canning (118 days).

Johnson has suffered another defeat this week. The British Supreme Court ruled that the suspension Johnson imposed on the House of Commons is unlawful. Despite a storm of criticism, Johnson has no intention of apologizing to MPs. Or to Queen Elizabeth, whom he had seduced under false pretenses to approve the suspension of parliament. Instead, he chooses the counterattack. He compared himself to the Hulk, who gets stronger when he's angrier. In addition, he challenged the opposition to table a vote of no confidence against him.

Huge miscalculation
You would think that Johnson is strongly committed to new elections in the hope that he will get enough support to push Brexit through. However, it has become a series of miscalculations. In 2016, ex-Prime Minister David Cameron resigned because he linked his fate to the referendum, and 1 year later the Conservative Party lost their majority in the British House of Commons. That happened in early elections, which Prime Minister Theresa May had just announced in the hope that she could increase the position of that party. Earlier this year she had to resign, due to the assessment that she could get her agreement through the House of Commons.

There is a good chance that the list of misses will soon be expanded with the elections that Johnson is betting on. However, he is now mainly trying to gain time to push through a no-deal Brexit. However, the opposition has already announced that it will only agree to elections if there is a guarantee that Johnson will not secretly lead the country out of the European Union. The Brexit deadline is October 31 and the two-week European summit is the prime minister's last chance to reach an agreement with the European Union himself.

In the fridge
However, the chance that Johnson will reach an agreement with the European Union is very small. European diplomats have already hinted that the negotiations are moving more slowly than under May. Miraculously, if an agreement is reached, it will never succeed in getting that agreement through the hostile House of Commons in time. It is almost inevitable that Johnson will soon be faced with the choice of requesting a painful postponement or resigning.

In both scenarios, however, the British pound breathes a sigh of relief, as the scenario of a no-deal Brexit goes back into the fridge for a while. The currency has already appreciated by 3% against the euro in recent weeks. That revival may just continue for a while.

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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