Parliament grabbing the wheel steers sterling higher

While the vote in Parliament next Tuesday might not break the Brexit deadlock, it could give us a better steer on where the UK is headed. After all, MPs will vote on a series of amendments which could take a no deal Brexit off the table. Given that this could trim the downside risk to the economy, it is not too surprising that sterling has crept up this week. Of course, what happens next in the Brexit saga is anyone’s guess. But cutting through the political noise, our sense is that in each of the various outcomes, there is more upside to GDP growth and the pound than is widely believed.