January 16, 2019 09:52: EU Withdrawal Bill rejected, future scenarios from [Mr. Rikio Shima's newsletter]
In the early hours of the 16th Tokyo time, the UK Parliament rejected the Brexit bill (opposed 432, in favor 202). It was a historic landslide defeat. How to forecast the pound and euro going forward? In the investment newsletter “Shima Rikio’s Practical Real-Time Trades” provided by GogoJungle, Mr. Shima writes the following.
As for the future scenarios, within three days (by January 21), the government can propose an alternative. It may go to a third or fourth vote. However, those bills are likely to be rejected as well.
Nevertheless, many sell-side analysts expect that eventually a bill submitted by a cross-party group of MPs, which is similar to the government’s bill but slightly different, will be put to a vote. Why would a bill that has been thoroughly rejected end up being adopted in the end? Because UK politics is involved. Each MP will act to maximize their political performance. Therefore, even if Prime Minister May’s plan fails, there is a final compromise where a closely related cross-party bill receives approval. This is something you only understand if you are versed in UK politics.
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It has become a somewhat complex discussion, but these are the kinds of scenarios that seem possible going forward. Since no decisive news is expected for a while, trading the pound could become difficult. However, as a main scenario, a gradual and soft agreement seems likely (an agreement-free Brexit appears unlikely, as a cross-party MPs coalition seems likely to form, so the probability of that scenario is quite low). The pound is therefore expected to be slightly firmer.
As for other currencies, the euro is likely to weaken. The euro/yen may fare better than the dollar/yen short. The Australian dollar did not appear to have noticed China’s tax-cut proposals. It is not clear how effective they will be, but the scale is not small, so I would like to do a bit more research.
“Shima Rikio’s Practical Real-Time Trades” (Rikio Shima)quoted.
For those who want to read the full text, please click the banner below for “Shima Rikio’s Practical Real-Time Trades” to check details such as how to apply. Can Brexit be avoided without a deal? (Editorial Desk)
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