While a Brexit deal has been reached, it still needs to be approved, reports Ashraf Laidi.
The British pound (GBP) pushed to a fresh five-month high of $1.2990 after news of an agreement on renegotiating the Brexit deal between the UK and the EU. Now the deal will be voted upon by the British Parliament in a special session on Saturday, requiring the backing of 320 members of Parliament to pass.
The looming danger of defeat from ongoing Democratic Unionist Party (DUP) opposition is the major source of risk to GBP trades. We are also watching crucial technical dynamics in U.S. equity indices vis-a-vis some of their sectors.
The new deal differs from Theresa May's Withdrawal Agreement via more alignment between the EU single market and Northern Ireland. The latter will remain an entry point into the EU's customs zone and products entering Northern Ireland will not be charged as long as they are not deemed risky to leave the border.
Fighting for 320
Considering the DUP's opposition, in order to obtain the minimum 320 votes in Parliament for the deal to be passed on Saturday, Boris Johnson must win as much support as he can from the 287 Conservative members of Parliament, as well as the 23 former Tories, most of whom were dismissed from the Party after they rebelled against his decision to prorogue parliament.
The key question is, will enough Labor members vote for the deal to reach the total 320. One crucial issue is the constituency factor, which could force undecided Labor members of Parliament to vote alongside their predominantly Brexiter constituency.
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Ashraf Laidi recently talked about the Dollar, gold and the Chinese yuan Triangularity at TradersEXPO New York.
