Last night Parliament backed the Brexit bill outlined by Theresa May’s Government, with a huge majority of 498 votes to 114. The bill allows Parliament to debate the issue, with expectations for May to invoke Article 50 in the weeks ahead, beginning the process of EU withdrawal.
A Brexit White Paper will be released shortly detailing the Government’s Brexit strategy. It is anticipated further conflicts will arise between both the Conservative and Labour parties, with Shadow Chancellor John McDonnell promising to fight Theresa May’s ‘reckless Brexit’.
Government are working towards a March 9th deadline, on the basis ratification of the White Paper goes smoothly and MP’s can agree on Brexit terms. With this in mind the Pound may begin to withdraw from its recent highs as investors seek safer currencies.
The Pound has already fallen a cent since the beginning of the trading session.
Bank of England raise growth forecasts sharply
“Domestic demand has been stronger than expected in the past few months” Carney stated, leading the Bank of England to upgrade its growth forecasts for 2017 to 2%, up from November’s forecast of 1.4%.
Despite concerns that inflation may rise to 2.7% next year, the Bank of voted in favour of keeping rates on hold at 0.25%.
Will the Bank of England raise interest rates?
If inflation and wage growth continue to propel in the right direction, the Bank may have to raise interest rates more sharply than expected, a move that is quite likely to result in Pound Sterling strength.
The financial markets predict a 50% chance of rate hike this year adding further strength to the Pound. Markets are likely to begin pricing in a hike which could cushion the impact on GBP once the Government invoke Article 50.