Brexit: Betting Markets See Near Coin-Flip Odds Of A Second Referendum, “Plan B” On Tap

Much like a rollercoaster ride, this week’s Brexit developments have been full of twists and turns…but have ultimately taken us right back to where we started the week. PM May’s Brexit deal was roundly rejected on Tuesday, but the Prime Minister subsequently won Wednesday’s no-confidence vote. As we head into this weekend, May is once again headed to Brussels to try to forge an agreement that will be acceptable to both the EU and Parliament.

The Prime Minister continues to rule out a second referendum on the issue, though betting markets are more open to the idea; according to Bloomberg data, traders now see the odds of another vote at 42% while the implied probability of a no-deal Brexit has fallen below 12%.

For FX traders, the (perceived) drop in the likelihood of a hard Brexit are a bullish sign for the pound. GBP/USD is poised to finish higher on the week (notwithstanding Tuesday’s intraday swoon) and see its highest weekly close in over two months.

With Theresa May set to reveal her “Plan B” proposal on Monday and a vote scheduled for January 29th, traders look likely to take another ride on the Brexit rollercoaster next week… the only question is whether we’ll fall off the rails at some point!

(Click on image to enlarge)

Source: TradingView, FOREX.com

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.
Peter Cooper 1 month ago Contributor's comment

Traders are right about the no deal Brexit being off the table. Indeed, unless I am missing something - and I have not had any comment yet saying this is wrong - then the odds are more like 100% against this option, see:

seekingalpha.com/.../4234297-deal-brexit-will-never-pass-u-k-parliament