Will Theresa May still be PM after the government’s Brexit vote?
Sterling briefly sank below the 1.27 mark against the US Dollar on Monday afternoon, with investors increasingly sceptical that MPs will back Theresa May’s Brexit deal at next week’s government vote.
T
he Prime Minister launched another staunch defence of her agreement on ITV television yesterday morning, again stressing that a vote in favour of her Brexit deal would be in the national interest. Markets seemingly took unfavourably to May’s suggestion that she would still hold the job of Prime Minister following the vote.

With next Tuesday’s vote now looking increasingly unlikely to pass, the ousting or resignation of May as Prime Minister may be the only path to renegotiations or another referendum on EU membership. May has repeatedly stated that there would not be another referendum under her leadership, while the European Union stressed that the current agreement is a take-it-or-leave-it deal that cannot be renegotiated.

Governor of the Bank of England Mark Carney is scheduled to speak again this morning, with the topic of Brexit likely to be at the forefront of discussions. Carney has become increasingly outspoken in favour of Theresa May’s Brexit deal in the past couple of weeks, suggesting that a ‘no deal’ scenario would risk another recession. This week’s UK PMI releases will likely go under the radar as all eyes remain firmly focused on Brexit.

Italy headlines support the Euro



In other news, the Euro ended the day higher against the US Dollar following headlines that Italy may be ready to scale back on their budget deficit plans. There has also been renewed appetite for risk among investors in the past few days following last week’s G20 summit, which ended with President Trump and Chinese President Xi striking a 90-day truce on additional trade sanctions. While this does not necessarily guarantee a trade deal it is an encouraging sign of progress. That being said, the closer we get to 1st March with no agreement, we could see a renewed flight from risk.

This week is relatively data heavy, particularly in the Eurozone. Tomorrow will see the release of the latest composite PMI, the single most important indicator of growth in the Euro-area. Wednesday’s retail sales and Friday’s Eurozone growth numbers will round off a fairly hectic week that could give us a decent indication as to the overall health of the bloc’s economy heading into the New Year.
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