Stuck between a rock and a hard place

We all know how the saying goes, 'you can please some of the people, some of the time; but you can't please all of the people all of the time'. That saying sums up some of the troubles that Theresa May has in negotiating Brexit. The happier Brussels gets, the more irate her own euro-skeptics become within her own party. Recent negotiations with the EU have taken a more positive tone and the GBP has been gently bid as of late on the back of this optimism. However, there are still some very real risks for a no-deal Brexit getting done.
The biggest risk of a no-deal Brexit is if Boris Johnson makes a bid for leadership. There was talk of an open talk to oust May last week and Boris Johnson is very vocal in his criticism of the Chequers agreement. He is positioned to potentially replace May. However, it is notable that Liam Fox ( the Trade Secretary) and Michael Gove (the Environment Secretary) have both voiced their support for May.
The big question is will Theresa May hold on as PM and negotiate her Brexit plan through. Obviously, I don't have a crystal ball, but I have a sense for where the direction is heading and that is for May to hold her position. I have a number of reasons I think that the Brexit negotiations will continue with May at the head ,which are as follows:

  1. The difficulty of the Brexit negotiations have wearied most people and some people in the UK would, if they voted again, vote to remain in the EU. They now want the easy option. If the path of least resistance is a deal, most people will take that route as long as it is not too punitive for the UK.
  2. Boris Johnson is a funny character, and was fun to have in government, but could he be trusted with steering Briatin as a nation? I'm not sure, he could. Theresa May looks like the girl who does her homework at school whereas BOJO looks like the boy who turns up late to class, with his shirt untucked, and says the dog ate his homework...again. Maybe it's just the floppy hair and constant quips, but impressions count.
  3. Brexit was, for many people, never about leaving the EU per se. It was all about a disenfranchised electorate who no longer felt cared for by the Government. It was, for many people, a way of hitting back and making their voice heard. It was first and foremost a domestic process. So, I don't sense a massive appetite to really go for the hard Brexit route and take the potential risk that would involve. When you have Mark Carney coming out saying British property would fall by 20-30% that gets homeowners very worried. If this was a game of pontoon, the British public would stick. No-one wants to twist, as it feels there is more to lose than gain by doing that. Now, this could be a wrong assessment, but my thinking is that this is the perception people now have.

That's my take on it and I anticipate May staying in place. However, keep in mind that a breakdown in May's control over her party with someone like Boris gaining ascendancy will result in a sharp sell off in the GBP. Also, remember the Labour Party could start making a call for a second Brexit referendum. So far Jeremy Corbyn has not done that and made those calls. We have been in many situations before where the least likely option ends up happening and Brexit itself was a good example. People didn't think it would happen, but it has. So, as traders we want to be positioning ourselves to benefit from surprises, not over leveraging ever and reading the tea leaves to get as early a heads up as possible as to where negotiations are going.
So, we have a wily bunch of readers here at ForexLive, and I would love to know what your thoughts are on this? Will May stay or go? Brexit a done deal or more kinks down the line? Conservative party conference is on the 3rd of October, so that's the next key hurdle for May. Stay tuned.