On June 26th, 2016, the United Kingdom went to the voting booth to decide on the future of the country. Before the vote, the consensus among close watchers was that the voters would vote to remain in the European Union. When the final vote was tallied, it showed that most of the voters were opposed to the country’s membership in the European Union.
After the vote and the resignation of then prime minister, David Cameron, Theresa May became the new premier. Immediately, she created a team to negotiate with the European Union on a future relationship. This culminated in a deal that was ratified by the EU in November last year. This deal was then to be presented to the British members of parliament.
Today, the members will vote on whether to accept or reject the deal that will be presented to them. The possibility is that the members will vote to reject the deal, which will be a major blow for Theresa May and her administration.
The key issue they reject in her deal will be on backstop. The backstop goal is to ensure that there will be no hard border between North Ireland and the Republic of Ireland. The European Union has said that the backstop will only apply to the North Ireland area. On the other hand, most members of parliament believe that the backstop issue will apply to the rest of the country. This means that the UK will be tied to the European Union rules. In addition, the UK has tried to make the backstop time limited, which has been opposed by the European Union.
Therefore, today will be an important day for the United Kingdom because a vote against the deal will leave the country in an uncharted territory as the March deadline nears. Leaving the EU without a deal will mean a more difficult period for the UK. This is simply because the EU and UK are so intertwined. For example, leaving without a deal may mean that the movement of trucks in the border will take days. Today, it takes less than five minutes. A loss by Theresa May could also lead to calls for a new referendum. It could also lead to a new election.
The sterling has continued to move higher ahead of the vote on the hopes that the vote will be delayed. The GBP/USD has moved to the highest level in 7 months. These hopes have been brought by the fact that all sides of the divide don’t want to leave the EU without a deal because of the number of jobs that would be lost. The price has been above the short and medium-term EMAs while the RSI has been below the overbought level of 70 this week. Therefore, the key areas to focus on today may be 1.2600 and 1.3000.