Strictly come dancing with Theresa May and the EU
We know that Theresa May can dance on her own, but can she do the tango with the EU? I'm not sure anyone could, but Theresa May is struggling with her regular partner as the UK's Parliamnentary Brexit vote has been postponed. Justin had it here as it was breaking and before the pound started falling.
This is probably not a surprise really as it was quite strange to see Theresa May waltz into a disaster. It never seemed likely that she could have won the vote and that is what she said in the end as the reason for postponing it , recognising the large margin she would lose the vote by. See Adam's repot on that here.
Theresa May is now going back to the negotiating table with the EU. However, the EU is no mood to re-negotiate. EU's tusk was quick to emphasise that he would 'not be renegotiating the deal'. See here. Theresa May is back between a rock and a hard place and the pound is being dragged down with her, breaking the lows from June 2017 and currently at 1.25619. See Justin's news wrap here and the funny Brexit song in case you missed it.
The question is what next? The funny thing about this scenario is Theresa May's ability to walk, or quick-step, towards a car crash calmly. Every analyst I read said that Theresa May was doomed to lose the Parliamentary vote, and yet she persisted. Finally, it seemed, Theresa May had to face the fact that she would be defeated. Looking forward, I cannot see a way through for May. Of course, that doesn't mean there isn't a way through, I just can't see one. I find myself increasinglyly rooting for Theresa May now. You know the way you see a baby gazelle on a nature programme running away from a pack of lions and you think, I hope you make it little fella. Well, that's the mental image I have for May, alone, isolated, politically hunted and yet showing remarkable pluck. I admire her fortitude and resilience and this alone is what is keeping her in place, that and the sobering reality that no-one else has a better idea. Boris Johnson just appears too scatty and cavalier for the detailed negotiations necessary for a Brexit negotiation or a rebuilding of the UK economy outside of the EU. Jacob-Rees Mogg is generally lampooned as an 18th Century man living in the 21st Century. The sort of fellow you might expect to meet if you went time travelling back into Dickensian London. Needless to say it is unfair, and the man has some fine principles which I admire, however, that is the media age we live in and, for now, Rees-Mogg is just not the man I can see people rallying around. So, May stays...for now. Although, it is increasingly hard to see how she does as we now have the following options ahead.
A no-confidence vote in the government.
This would require the opposition Labour Party to field a vote of no-confidence in order to force a general election. This is an unlikely option since it would require some conservative and or DUP MP's to say they have no-confidence in Theresa May.
A conservative leadership challenge.
This would need the 48 letters submitted to the chair of the 1922 committee, but I can't see a conservative replacement for May. No-one seems up for the job.
A return to the EU to renegotiate the Irish backstop
Theresa May is heading back to Brussels and this is where all her hopes and focus is for now. The EU is reluctant to re-negotiate and Tusk has already stated that the EU won't actually be renegotiating. However, it still remains to be seen. In political deadlocks, people usually find a way of getting through so it looks like no-one has backed down.
These are the three most likely immediate options with option three the default. A lesser person would walk away now, but Theresa May is not the walking sort. She dances on. However, for now, I see only more selling pressure ahead for the GBP and GBP/USD remains a 'sell on rallies' pair for me. She may not have the best dance moves around, but at least she has the guts to step on the floor. So, in the words of strictly come dancing...Keep dancing ;-)
