The sterling declined in overnight trading as the members of parliament deliberated on a number of the so-called indicative votes. These are single bills that the MPs are required to vote on, with the hope that one gets the majority. The reason for this situation is that the members have failed to get a consensus on Theresa May’s deal that she has been negotiating for the past two years. Overnight, the following indicative votes were voted on.
The first was the Customs Union option. This would allow the country to remain in the EU’s customs union. This would limit the UK’s ability to do independent deals with other countries but would reduce friction at the border. This crossed one of Theresa May’s red lines and could see bigger division in the conservative party. This vote was backed by 265 MPs, with 271 against and 102 abstentions.
The second vote was calling for the softest of all the Brexit options. This would keep the UK in the EU’s single market and maintaining a customs union with the EU. This was previously known as the Norway Plus. This vote received 189 votes, with 283 against it and 166 abstentions. The challenge with this option is that it would leave the UK in the EU without giving it a fair say on decisions. It would also not act on immigration.
The third vote was on a second referendum. This one received 268 votes in favor, 295 against, and 75 abstentions. This was proposed by a Labor member, who said that the option would prevent any withdrawal agreement from being ratified without a public vote.
The fourth one was the revocation, which called for the UK to seek an extension to Article 50, if there was no deal two days before a no-deal Brexit. If the parliament votes to revoke, the motion calls for an inquiry into the kind of the future relationship. The goal of this motion was to have a fresh referendum. The UK is entitled to revoke the Article 50 unilaterally, although this has been viewed as a way of changing the first referendum vote.
The other options were those calling for a no-deal Brexit on April 12, and one calling for staying in the customs union but not in the single market. Today, Theresa May will meet with her divided cabinet to decide on the way forward.
After the indicative votes failed, the GBP/USD pair declined sharply to a low of 1.3030. On the five-day chart below, the price then stabilized along the 21-day and 42-day moving averages. The MACD has remained unmoved as shown below. The pair is likely to continue being volatile in today’s trading as the Brexit confusion continues.