UK Parliament approves Brexit bill, thus allowing Theresa May to start divorce talks with the EU. When the talks will start and what is the impact for GBP?
14 March, AtoZForex – The Prime Minister of the UK, Theresa May is getting ready to invoke the Article 50 during the last week of March. Yesterday, AtoZForex reported that House of Lords will most likely pass the Brexit bill by midnight Monday.
UK Parliament approves Brexit bill
Indeed, the lawmakers allowed Ms. May to begin two years of divorce talks with the EU. The UK Parliament has passed the law, thus permitting the UK government to trigger the Article 50 of the Lisbon Treaty. Moreover, the House of Commons has overturned adjustments from the unelected House of Lords that were seeking to limit Ms. May’s actions.
The UK PM is ready to announce the official start of Brexit in the last week of the current month. Theresa May’s victory in Parliament gives her an opportunity to negotiate Brexit with freedom. Moreover, it strengthens her stance on power in the ruling Conservative Party. Ms. May now faces a challenge of pulling the UK out of the EU on good conditions, while also guiding Scotland’s renewed initiative for EU exit.
What now? May pulls the trigger
Now, when lawmakers ruled out in May’s advantage, she is free to commence Brexit process as she was planning before. Additionally, lawmakers have rejected two revisions by unelected peers. These revisions would have assured rights for the EU residents living in the UK and given Parliament a final word on Brexit talks. The UK government has argued against the changes. They have stated that they wanted to protect Ms. May’s flexibility in the divorce talks. As UK Parliament approves Brexit bill, David Davis, Brexit Secretary, has stated:
“Parliament has today backed the Government in its determination to get on with the job of leaving the EU and negotiating a positive new partnership with its remaining member states. We are now on the threshold of the most important negotiation for our country in a generation.”
When exactly will the talks start?
Reportedly, in order to avoid overlapping the March 25th celebrations the 60th anniversary of the EU’s founding treaty in Rome, the talks might start at the very end of the March. Moreover, tomorrow we have 15 of March – Dutch elections, and the Scottish National Party’s conference on March 17-18.
As March 26th lands on weekend and the March 31 is the day when the UK Parliament is on recess, the Brexit talks may officially start in the period between March 27th- 30th.
Donald Tusk, the European Council President, has stated that the EU would react to an Article 50 invocation within 48 hours. Margaritis Schinas has stated the EU commission will then issue legal rules for the Brexit talks.
What can happen to Pound?
As UK Parliament approves Brexit bill, the head of G10 fx strategy at CIBC, Jeremy Stretch, has commented:
“While we expect near term GBP negativity, note the macroeconomic challenges ahead are tough, we would assume that both the Treasury and the BoE are now too optimistic upon growth we do not necessarily expect aggressive fresh sterling extremes, this comes as the market has already discounted most of the bad macroeconomic news.”
Another expert, Kallum Pickering, senior UK economist at Berenberg, believes that the value of Pound remains the best indicator of market sentiment. He stated that if the UK PM will take a non-confrontational stance, markets will respond positively in the near future. On the downside, in case Ms. May will push on migration policies, this may drag the GBP down.
Think we missed something? Let us know in the comments section below.