UK gilts suffer after PM May admits to delay in new Brexit deal till March 12; PM’s speech eyed

The United Kingdom’s gilts suffered during Monday’s afternoon session, after the country’s Prime Minister Theresa May admitted that she would not be able to secure a new deal with the EU this week, and would instead aim for a ‘meaningful vote’ on March 12 (just seventeen days before the Article 50 deadline).

However, the PM’s speech, scheduled to be held on February 26 will add further direction in the debt market.

The yield on the benchmark 10-year gilts, rose 1-1/2 basis points to 1.174 percent, the super-long 30-year bond yields jumped nearly 2 basis points to 1.703 percent and the yield on the short-term 2-year traded 1-1/2 basis points higher at 0.763 percent by 11:25GMT.

Among the most notable proposals is one tabled by the Conservative MP Sir Oliver Letwin and Labour’s Yvette Cooper, which, if approved, would allow MPs to demand that Theresa May should request an extension of the Article 50 deadline beyond 29 March if Parliament fails to approve a deal by the middle of March.

An alternative, tabled by Conservative backbenchers Andrew Percy and Simon Hart, calls for a limited delay to Brexit Day to May 23 (the start of the European Parliament elections) if there is no formal deal approved by March 13.

Given that there would still be insufficient time for Parliament to adopt the necessary legislation (particularly the key Withdrawal Agreement Bill) before March 29 even if MPs approve a deal on March 12, an extension would seem essential to avoid a disorderly no-deal Brexit, and reportedly May herself might make a concession to such a move ahead of Wednesday’s votes.

Finally, a further amendment to be watched this week is that proposed by Labour MPs Peter Kyle and Phil Wilson, which would call for MPs to support the negotiated Brexit agreement conditional on the outcome of a new public referendum – this one, however, might seem premature, and might be parked until the meaningful vote on March 12, Daiwa Capital Markets reported.                        

Meanwhile, the FTSE 100 remained 0.18 percent higher at 7,191.25 by 11:30GMT, while at 11:00GMT, the FxWirePro's Hourly Pound Strength Index remained highly bearish at -102.80 (a reading above +75 indicates a bullish trend, while that below -75 a bearish trend). For more details, visit http://www.fxwirepro.com/currencyindex