Not much is moving in markets today. Drivers have been on repeat for so long investors are suffering from boredom. FX volatility has declined significantly of the past week but GBP volatility remains least effected. Cleary the lower pace fall is due to critical political premiums still relevant. PM May has requested that Brexit would be official postponed to 30th June from 29th March. This offer is again dependent on UK Parliament approving a Brexit withdrawal agreement next week. This should increase the likelihood that UK Parliaments approved a deal in its third attempt.
It important to note in our view that European policymakers would like to dodge an economically catastrophic “hard” exit. In addition, the extra time gives “remainer” time develop a new strategy. By breaking the hard deadline, the rational that other absolutes are flexible becomes material. With over 2 million people signing an online petition to cancel Brexit the possibly of “No Brexit” has increase significantly. The pace of signatures surged after May statement on Thursday. Interestingly the petition is only focused to “Revoke Article 50 and remain in the EU” and remains well meaningfully number in reality. However, it might be just enough to convince political to put the decision to the people. Finally, figures from the poll indicates that signatories were not only from the UK. We remain skeptical on long GBP bet despite the supportive development. We should see fall in volatility as an opportunity to reload long vol positions. The Brexit chaos is far from over.
