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PM Johnson will be legally obliged by the 'Benn Act' to send a letter to the European Union requesting extension if the parliament does not approve the deal or vote for a no-deal.
The United Kingdom, a part of the 28-country European Union (EU), has been a member of the European Economic Community for 46 years now. The UK had voted to leave the EU by 52 percent to 48 percent in June, 2016, and now the October 31, 2019 deadline for Brexit is staring the nation in the face. British Prime Minister Boris Johnson always said that he would not quit and insisted that only his Conservative Party could deliver Brexit.
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Suggested solution by PM Johnson
Johnson proposed an all-island regulatory zone in Ireland in his final pitch for a Brexit deal before the end of the month. The plan involves a ‘two borders for four years’ measure that will leave Northern Ireland in a relationship with Europe until 2025. It accepts the need for both a regulatory border between Europe and Northern Ireland in the Irish sea for four years and customs checks between North and the Irish Republic. Positive comments from Irish PM Leo Varadkar that a Brexit deal could be clinched as the talks are moving in the right direction after his meeting with Johnson has pushed Sterling higher. But challenge to convince a deeply divided British parliament to ratify the agreement remains. Huge gaps continue to prevail in the respective thinking.
October 17-18: European Council Meeting to take place where there is a possibility of agreeing to a Brexit deal suggested by PM Boris Johnson. But it is also important to note that a deal needs to be approved by the parliament before it can be ratified.
October 19: The parliament will be holding a special session for MPs on Saturday. It will be only the fifth time in 80 years that the parliament will be working on a Saturday. Debate would happen on alternative routes and a possibility of a vote on any deal.
October 21-22: Based on the outcome of the European Council Meeting and parliamentary session on October 19, a vote can be taken in the parliament.
October 31: Deadline for Britain to leave the European Union.
PM Johnson will be legally obliged by the 'Benn Act' to send a letter to the European Union requesting extension if the parliament does not approve the deal or vote for a no-deal. Also, in case of no-deal Brexit, an early election can also be widely expected after October 31. At any point in time, the Opposition can call a vote for ‘no confidence’ in the government.
Lastly, there is a legal option to cancel Brexit altogether by revoking Article 50, which is of the least possibility on the table.
Important GBP-USD technical levels
61.8 percent Fibo retracement (March 11 to September 2) comes at 1.2837 while 38.2 percent Fibo retracement (April 16 to September 2) comes at 1.2880.
On the lower end, 1.2605, which is the daily low, remains the first immediate support.
Kunal Sodhani is a forex strategist.
First Published: Oct 16, 2019 12:51 PM IST