Another defeat

Another defeat

The UK Parliament has gained more power over Brexit yesterday when MPs voted 308 to 297 to force the government to come up with a plan B within just 3 days if MP May’s Brexit deal is voted down next week (the government was expecting to have 21 days). This is the second defeat for PM Theresa May in just 24 hours, which weakened the pound overnight, dropping to 1.1045 against the euro. This could open the door to alternatives, such as a new referendum or new general elections (suggested by the leader of the opposition, Jeremy Corbyn). Sterling is holding on today, although the chance of a serious drop in value after the vote next week cannot be ignored (if MPs vote PM May’s deal down).
Although negotiations between President Trump and Democrats continue, today is Day 20 of the government shutdown. The president has declared that if he doesn’t get a deal to fund his project (wall with Mexico), he threatened to declare a national emergency. This is a worrying situation but hasn’t had a significant impact on the USD (yet). There was, however, a rally in US stocks for the fourth day (the longest streak since September) following the release of the latest Federal Reserve meeting minutes: they confirmed that the central bank is now adopting a more cautious approach and could place interest rates on hold until March at least (if not later) as policymakers wait for clarity on how the current global growth risks could affect the US economy. The US dollar fell and reached 1.28 against the pound while still above 1.15 against the single currency.

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