Theresa May's Black Knight Brexit strategy: 'tis but a scratch'
Lessons of the Black Knight
In Monty Python there is a scene in which a fight takes place between two knights. King Arthur has his way blocked by the brave black knight. The conflict results in the Black Knight receiving a number of blows which would normally incapacitate a regular fighter. However, not the Black Knight. Without arms and , eventually, even legs he fights on. You can see the clip here and apologies for the odd expletive thrown in.
There are certainly some similarities between the Black Knight and Theresa May. Normally fatal political wounds Theresa May takes as ' but a scratch'. In fact the bleaker her outlook, the cheerier she seems.
Last week May postponed her Brexit vote. Theresa May won a vote of no confidence within her own party. Another one can't be called now for a year. She then rushed back to Europe to try to get some reassurances from the EU about the Northern Irish backstop border issue. That proved fruitless and now here we are with no Brexit parliamentary vote scheduled until the new year. Tony Blair has been calling for a second referendum over the Weekend and Jeremy Corbyn is wavering on the tee about initiation of a no confidence motion in Government across all of Parliament. The indications are that he is unlikely to call it too. So, we are once again, heading ever more earnestly to a Hard Brexit come March 2019. Time is running out and Theresa May fights on without anything to really have any impact. Like the Black Knight, without arms or legs, Theresa May maintains a firm conviction that she can win through. The only way I can see thus happening is if the EU find some kind of way to compromise. This is the only option I can see working now and would be a potential relief for the GBP if it happens.
However, for now, Theresa May fights bravely on. Let's hope she doesn't have to 'call it a draw' in the end and the EU will find some way of limiting the length of an otherwise indeterminate backstop plan. Until then, keep selling the GBP. Look at pivot points, fib levels and 50,100 and 200 moving averages to define and limit the risk.