May's retreat raises the risk that the deal will not happen

Maybe today's May move was strategic, to gain time. After suffering a humiliating loss, defeated May told Parliament today that she was giving up and canceling tomorrow's vote to return to Brussels for further talks with European leaders. In her words, she was not expecting any significant changes in the deal.

This raises the prospect that May will return to Parliament in January with the same deal, but this time it will rely on the psychological effect of market outlets and the fear of a chaotic exit, thus legislators would be convinced of the right conditions and to support it.

In response to today's events, European Council President Donald Tusk organized a leaders meeting on Thursday, but with his speech today he stressed that the conditions would not be renegotiated. Maine critics do not like the conditions because they think the UK will fall into the EU's "orbit" forever - a situation they think is even worse than their current membership.

Mei said the government would start preparations in case of a possible hard Brexit, which is expected to happen after 16 weeks. It further reinforced the fears of a lack of deal, especially to the business, hoping to get support, including attracting rebel Conservatives.

The worst option is to have no voting date until January 21st. The more the date is postponed, the more pounds will become cheaper. Here are the possible options after the situation today:

Brexit is a real test for the UK's parliamentary system and triggered a precedent in which the markets "got on the trains of the horror" and triggered a pound decline of more than 15% since June 2016. The referendum should then resolve the issue with a simple "yes" "or" no, "but things turned out to be much more complicated.

Source: Bloomberg Finance L.P.

Graphs: Used with permission of Bloomberg Finance L.P.

Photo: Pixabay

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