The House of Commons inflicted a heavy defeat on Theresa May’s government on Tuesday as it comprehensively rejected the prime minister’s deal for the UK’s withdrawal from the EU. The defeat prompted Labour leader Jeremy Corbyn to immediately call a vote of no confidence in the government. Having secured the support of hard-line conservative Brexiteers, Theresa May survived the vote.
It is tempting to believe that, in spite of the drama, little has changed in the outlook for Brexit. However, developments below the surface give us reason to believe the likelihood of a hard, no deal Brexit has receded. While a great deal of uncertainty remains, it seems probable that Theresa May will eventually secure support for her compromise deal or, failing that, seek and extension to the 29th March deadline.
Market reactions to events in Westminster have been relatively muted. Having initially weakened once the scale of Mrs May’s defeat was confirmed, sterling rallied on the news of Mr Corbyn’s vote of no confidence. Our interpretation of these movements is that the market shares our belief that a softer Brexit has become more likely.
The message from the Omnis investment team is to remain calm. We may witness further volatility in sterling over the coming days and weeks, and UK equities could be affected, but the Graphene and OMPS portfolios are designed to weather short-term market fluctuations.
This update reflects Omnis’ view at the time of writing and is subject to change.
The document is for informational purposes only and is not investment advice. We recommend you discuss any investment decisions with your Openwork financial adviser. Omnis is unable to provide investment advice. Every effort is made to ensure the accuracy of the information but no assurance or warranties are given