UK PM Johnson Battles To Push Brexit Deal Through

U.K. Prime Minister Boris Johnson is urging MPs to “get Brexit done.”

Over the weekend, Johnson tried to win approval for his withdrawal agreement. MPs declined to vote the deal through on Saturday.

The official deadline to Brexit remains Oct. 31. despite an extension request.

“We are going to leave by October 31,” Michael Gove, the U.K. official in charge of planning for a "no-deal" Brexit, said Sunday, according to The Associated Press. “We have the means and the ability to do so."

Johnson’s spokesman said the U.K. government is hoping to hold a new vote on its Brexit deal Monday.

Earlier Monday, the pound sterling reached a five-month high at $1.30, and domestic stocks in the U.K. continued to have a good day.

Traders have been reacting to predictions that Johnson has enough parliamentary support for his withdrawal agreement.

Goldman Sachs has also lowered its probability of a no-deal Brexit from 10% to 5%. This is in response to the U.K. parliament withholding its approval until formal ratification legislation is passed.

U.S. Secretary of Commerce Wilbur Ross said the U.S. will strike a trade deal with the U.K. shortly after Brexit.

The U.K. government will spend the next several days under pressure to approve a plan to divorce the EU.

Odds Of A Deal Rise

The U.K. parliament is once again seemingly poised to vote on the Brexit deal agreed last week by the government and the EU, Rupert Thompson, head of research at Kingswood, said in a note. 

“With the result still hanging in the balance, the way forward is still far from clear. That said, and at the risk of stating the blindingly obvious, the risk of a ‘No Deal’ exit now looks minimal and the odds of a Deal are significantly higher than a couple of weeks ago.” 

This is certainly how the markets appear to be reading the situation, as U.K. equities have outperformed global stocks by some 3.5% in sterling terms.

Within U.K. equities, mid-cap, and to a lesser extent small-cap stocks, have unsurprisingly been the big winners, gaining 5.5% and 1.8% respectively over this period, Thompson said. 

“The FTSE 100, by contrast, is little changed – held back by the high proportion of earnings coming from overseas. If the Deal ends up being agreed by Parliament, we would expect to see more of the same, with the pound possibly climbing to $1.35, U.K. equities outperforming global stocks, and mid and small cap stocks doing best within the U.K. market."

Price Action

The iShares MSCI United Kingdom Index EWU was up 0.7% at the time of publication, while the Vanguard FTSE Europe ETF VGK was up 0.6%.

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