New Brexit Vote: Second Referendum or No-deal

On Tuesday, March 12, the British Parliament will hold a second vote on the adoption of the Brexit plan, agreed with the EU. The January 15 vote ended in a resounding failure, considered the worst in the last century.

It is predicted that this time again there will be fewer supporters than opponents. The comments of parliamentarians point to dissatisfaction with the fact that the EU did not make any meaningful concessions by proposing the same conditions with slightly different formulations.

The refusal to accept the updated May’s plan will lead to the fact that on Wednesday, March 13, the British Parliament will have to decide whether to leave the EU without a deal, the so-called No-deal Brexit. Informal polls show that parliamentarians are against an unorganized exit.

If so, then on Thursday, March 14, they will have to vote in favour or against postponing the exit from the EU, which is now adopted at the level of the law on March 29.

In addition, in the following days, the question of the need for a new referendum may be raised again. Previously, this idea was repeatedly rejected, but a clear impasse in the discussion of the Brexit issue increases the chances of a new referendum.

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A new referendum and prospects that Britain residents may change their minds are potentially good news for the British pound. In this regard, all votes and discussions in parliament this week will be considered from this perspective.

Markets and lawmakers were frightened by the prospect of exit without a deal during the previous months. However, as we see, this was not enough to push for a deal, and the issue of border control conditions in Ireland remained unresolved. An increase in the chances of exit without a deal can cause a serious blow to the pound since it implies the greatest damage to the economy in the coming months and quarters.

Alexander Kuptsikevich, the FxPro analyst