As a result of the Letwin amendment, UK politicians will instead turn their attention to the Withdrawal Agreement Bill (WAB), legislation that brings the recently renegotiated Brexit deal into UK law. A number of votes are expected to take place from 7pm this evening, the first of which, called the ‘second ‘reading’, will be a straight yes/no vote on whether to proceed with discussions. If passed, MPs will then be asked whether to approve an intensive three day timetable for the discussions to take place. Should this then pass, MPs will have the opportunity to vote on a number of amendments, of which may include adding a clause that puts the bill to a people’s vote.

Analysis conducted by the Financial Times, based on past voting records and recent MP statements, suggests that Johnson could have a majority of 5 in favour passing his deal before the end of the month. It is essentially too close to call and could go either way by a matter of a handful of MPs. Should Johnson fail in the coming days, we expect the EU to approve the UK’s request for a Brexit extension, which may well drag the crucial decision on Brexit into early next year, with a general election probably needed in the interim.

Sterling has so far reacted in a fairly calm manner to the prospect of a mammoth few days of political wrangling. The UK currency edged slightly lower against its peers following yesterday’s Bercow ruling, although it remains pretty well supported in the 1.29-1.30 range versus the greenback. We expect traders to be on edge and volatility to be sky-high in the coming few days.

Figure 1: GBP/USD (17/10 -22/10)