UK Government Suffers Another Historic Defeat

In the Market Insights video yesterday, I spoke about how fluid and volatile the ongoing Brexit process is. And yesterday we were served another reminder as MP’s voted to take control of the Brexit process.

The UK House of Commons voted yesterday evening with a result of 329 – 302 in favor of taking control of the parliamentary process around Brexit away from Theresa May. The vote once again highlights just how fractured the UK political landscape is becoming. Three Remain MPs quit their roles so they could join the cross-party movement for a longer Brexit delay.

Indicative Votes

Following yet another historic defeat for the government, parliament will now get the chance to vote on what type of Brexit they will back. These “indicative votes” as they’re being called, will allow MPs to effectively indicate what type of next steps they will back. This could be a longer delay to Brexit, a much softer Brexit, or a second referendum

However, May has made it clear that she is adamantly against any drive for a second referendum. She feels this stands against the wishes of the public displayed in the 2016 referendum and the 2017 general election.

Ministers Quit Their Jobs Over Brexit Direction

The ministers who quit their roles in order to stand against the government are Richard Harrington, Steve Brine, and Alastair Burt. In his resignation letter, Harrington explained:

“At this critical moment in our country’s history, I regret that the government’s approach to Brexit is playing roulette with the lives and livelihoods of the vast majority of people in this country who are employed by or otherwise depend on businesses for their livelihood. Further, as the UK’s industry minister, the clear message I have been receiving from the business community is that the failure to secure a deal and to rule out a hard Brexit is resulting in canceled investment decisions, business being placed abroad, and a sense of ridicule for British business, across the world.”

Despite the growing opposition and increasing pressure, however, May made it clear that she won’t be held to ransom by MPs saying:

“No government could give a blank cheque to commit to an outcome without knowing what it is. So I cannot commit to delivering the outcome of any votes held by this house. But I do commit to engaging constructively with this process.”

Technical Perspective: Topside Pressure Still Alive in GBPUSD

So you can see on the GBPUSD H4 chart just how stagnated price has become over the last month as traders await a resolution to this Brexit saga. It is worth noting, however, that bias does still seem to be to the upside. Price is moving in a broad rising triangle formation, putting pressure on the mid 1.33 highs. These have been tested twice now since the start of the year.

For now, an upside break is still the preferred option. However, if we see a break of the rising trend line and the structural support level at 1.2962, this view will be negated. Traders should keep an eye on forthcoming parliamentary votes this week which will likely provide the catalyst for the next move.