Par Dean Turner, UK Economist, UBS Global Wealth Management
As expected, Parliament has rejected Prime Minister Theresa May’s Withdrawal Agreement. However, the size of the defeat was unprecedented. May invited the leaders of the opposition parties to test the confidence of the government, and Jeremy Corbyn subsequently tabled a motion of no confidence. The path ahead remains unclear and all options remain on the table. In UBS Global Wealth Management’s view, May will survive this challenge as Conservative MPs have shown little appetite for another general election. As things stand, delaying Brexit beyond 29 March seems more likely.
“At this stage we do not advocate taking directional views on sterling and UK assets. The reaction of the pound following the vote would suggest that markets are not currently increasing the risk of an adverse outcome. For the time being, we expect that uncertainty will remain high and UK markets will stay volatile. Within portfolios, exposure to sterling-denominated assets should be maintained at benchmark levels until more clarity emerges.”