Having plunged to flash-crash lows on Sunday night following leaks of UK PM Theresa May's Brexit speech, cable is soaring this morning as she delivered the speech confirming that both houses of Parliament will vote on the final Brexit deal.
We warned the "surprise" was priced in…
Surprise taken out of tomorrow's speech. GBPUSD squeeze next?
— zerohedge (@zerohedge) January 16, 2017
And as Bloomberg notes, U.K. PM May’s announcement that both houses of Parliament will vote on the final Brexit deal is positive for the pound as the process should ensure that extreme outcomes are avoided, analysts say. The FT notes that the votes is expected in early 2019 and it is unclear what would happen if either house were to reject the deal.
- “The deal has to be good” to be approved, BofAML strategist Athanasios Vamvakidis says in e-mailed comments
- “Final take on this speech is that May has come across very well. This, in addition to the economic fundamentals, are good arguments for not being aggressively short GBP/USD below 1.20. The way she has come across today almost puts the EU in an out-of-touch position,” Stephen Gallo, analyst at BMO Capital Markets, says in e-mailed comments
- The announcement on the Parliament vote fueled the initial extension of the GBP rally, partly because it raises expectations that MPs less in favor of Brexit could have more influence, according to Josh O’Byrne, strategist at Citigroup; still, big picture hasn’t changed much after this speech
- May didn’t add to “hard-Brexit” fears, and hence the “sell-the-fact” reaction in the market, Manuel Oliveri, strategist at Credit Agricole, says in e-mailed comments
And the result is a chaotic spike in cable – the biggest move since 2008…
via http://ift.tt/2iIRE0w Tyler Durden