This is a spectacular moment. BoJo has lost tonight and the final decision will be taken tomorrow as the Parliament will vote for the possibility for it to take the lead in the negotiation in order to avoid a no deal Brexit.
Then BoJo will convene general elections.
Then we may have what everybody asks since the first referendum: a confirmation of the Brexit or not.
That’s may be the best move to clarify the political situation as the vote at the general election will again be remain vs brexit. No one will no longer be able to say “we didn’t know”.
The result is still random even if polls bend on Johnson’s side.
The general elections results will definitely give the answer. Will the UK remain in the EU or will they exit. An exit vote would probably mean a no deal brexit.
Therefore the pound will improve in coming hours but will follow polls’ results after BoJo convenes general elections. A poll in favor of Brexit will probably weaken the pound and conversely a stronger pound when polls are in favor of the remain side. The equity market will follow the same momentum. The point is that everyone will know that these elections will definitely close the referendum file. The huge uncertainty will be on the side the coin will fall. We can expect huge uncertainty and volatility if polls have the same volatility than before the referendum. Because investors know that this is the second chance.
This can be a source of a kind of sudden stop on the economic activity as no one will take strong bets on the future.