Another Parliament Defeat For May – GBPUSD Loses 1.5% Overnight- UK Retail Sales Bounce

 

Prime Minister Theresa May suffered a defeat on her Brexit strategy on Thursday that undermined her pledge to European Union leaders to get her divorce deal approved if they grant her In a show of muscle, hardline Brexit supporters in her Conservative Party decided to abstain, handing her an embarrassing, albeit symbolic, defeat as she tries to renegotiate her deal with the EU.

While it will not deter May from trying to secure changes on the most contentious issue of the deal – the Irish “backstop” – the vote does show that her pro-Brexit lawmakers are a major obstacle to passing any agreement.

May was absent from the House of Commons for the debate and the outcome of the vote, which deepened the sense of political crisis over Britain’s departure, more than two years after voters opted to leave the bloc by a margin of 52 percent to 48.

The crunch vote is now expected to come on Feb. 27, when May is due to return to parliament – and lawmakers who fear leaving without a deal could try to seize control of Britain’s departure from the EU.

British retail sales rebounded strongly in January as steep clothing discounts attracted wary shoppers, bucking a slowdown in consumer spending ahead of Brexit.

Compared with a year ago, retail sales were 4.2 percent higher in January, the biggest annual rise since December 2016 and again outstripping almost all forecasts in the poll.

Sterling edged a little higher against the dollar on the back of the figures but struggling to regain the 1.5% loss in GBPUSD inflicted following Teresa May losing the vote in Parliament last night.

RUNNING DOWN THE CLOCK ON BREXIT?

The pro-Brexit European Research Group (ERG), several dozen strong, had said they would defy May unless she dispelled their concern that she might after all baulk at a no-deal exit.

Ministers were keen to shrug off the defeat.

“The fact that ERG colleagues abstain is sending a message that they still want to find a way forward and find a solution,” said Robert Buckland, the solicitor general.

ERG members say ruling out a no-deal Brexit would not only weaken Britain’s negotiating hand but also remove what, for many, is the desired end-point: the cleanest possible break.

But some Conservative and many opposition lawmakers accuse May of “running down the clock”, edging Britain closer to the exit date to try to force parliament into a choice between backing her deal or leaving without an agreement.

A majority of lawmakers agree with businesses, which say that outcome would be catastrophic for the world’s fifth largest economy: causing delays at ports, fracturing crucial international supply chains and hindering investment.

Opposition Labour lawmaker Alison McGovern said it was time to stop the clock on Brexit.

“In any normal circumstances, this would be general election territory. It is clear that the prime minister cannot easily command a majority in the House of Commons, and that is central to our system.”

Reuters news contributed to this article.