14.05.201908:23 Forex Analysis & Reviews: The pound is awaiting the meeting of the "Backbench Business Committee"

Yesterday, the pound ignored the news that Labour had resumed negotiations with the representatives of Theresa May's government. As a result of the April talks, it became clear that the parties are still on opposite sides of the barricades and are not ready to make reciprocal concessions of a substantial nature. In addition, internal political conflicts (both in the camp of the Labour Party and in the camp of the Conservatives) complicate the already difficult dialogue between the opposing parties. Therefore, the positive statements of May's representatives on the resumption of negotiations were received coolly by traders. Today's data on the labor market in Britain, most likely, will also be ignored, given the upcoming events.

The fact is that tomorrow, May 15, the political fate of British Prime Minister Theresa May will be decided again. Despite the fact that she has annual immunity from impeachment, a certain intrigue still remains, and hardly any expert can now say with complete confidence about the final result of tomorrow's meeting of the 1922 Committee. However, first things first.

So, tomorrow, the 1922 Committee will have their meeting in London - that is, a group of British conservative deputies who are authorized to express a vote of no confidence in the current prime minister. They are also called "backbenchers", since they do not occupy a single post in the structure of the government, therefore, they can impartially evaluate the actions of its head. Looking ahead, I'll say that in this case they cannot initiate the question of Theresa May's resignation. Last year, the British prime minister had twice successfully passed through the procedure of a vote on a vote of no confidence. For the first time, conservative members of the same party discussed the issue of trusting their leader; for the second time, the entire House of Commons voted for this question. Despite the squall of criticism against May, the MPs still left her in the chair of the head of the cabinet: moreover, after the last vote, she received annual immunity from such initiatives.

After the autumn events, the prime minister was able to follow set course, and many (then) were convinced that the freedom of maneuvers that had appeared would allow her to lead the country out of the political impasse. But in reality the opposite occurred: the snowball of political contradictions only increases, bringing down the ratings of both the Conservatives and the Laborites. Local elections, which were held the week before last, only confirmed this fact. The Conservative Party lost more than 1.3 thousand seats (out of 8.4 thousand) and lost control over 49 local councils (out of 248), the laborites, in turn, lost 6 local councils and 86 deputies. Politicians reasonably associate such a disastrous result with Brexit, namely with the long-term period of uncertainty, which forces the British to live in limbo, in anticipation of an "economic apocalypse."

For this reason, Parliament's support for Theresa May fell to 30%, while the remaining 70% of the deputies strongly oppose her continued tenure. Naturally, in the conditions of such a frank political hostility, it is rather difficult, if not impossible, to conduct any negotiations on the coordination of a deal. But at the same time the prime minister can play her last trump card by putting her post on the line.

Previously, she has repeatedly stated that she could leave her post when Parliament approves her deal with the EU. But deputies need to specify these intentions and establish a fixed date of resignation. In other words, we are talking about a kind of deal: May agrees to voluntarily leave the prime minister post (while naming a specific date of resignation), but at the same time she makes a draft deal in Parliament, counting on their approval.

Here it is worth noting that earlier, they rejected a similar scenario in Downing Street: surrounded by May's entourage, they assured that the prime minister would remain at her post until at least autumn, when the general congress of the members of the Conservative Party would be held. But the failed negotiations with the Labour Party, as well as the increasingly popular idea of holding a repeat referendum, changed the mood of the "Iron Lady". At least, according to information sources of British journalists.

Thus, this week, Brexit's theme may once again play with fresh colors: if May really announces the date of her departure, the negotiations on the approval of the deal will acquire a new meaning. We can not say that in this case the transaction will be approved "automatically", but the likelihood of such an outcome will increase in many ways. At the very least, the initial reaction of the pound (and the GBP/USD pair) will be positive. In tandem with the dollar, the British currency can not only return to the area of the 30th figure, but also reach the main resistance level of 1.3130 (the upper limit of the Kumo cloud, coinciding with the upper line of the Bollinger Bands indicator on the daily chart).