Brexit Impasse

The probability of the UK and EU agreeing to a postponement of the current Brexit deadline date of March 29 is at an all time high of 83.3%. That is according to predictive trading platform Smarkets whose prices align almost perfectly with another Wisdom-of-the-Crowd market maker, Betfair, which currently offers odds of 1/6 on the same outcome.

Traders have been increasingly confident of an extension agreement since at least early January – when the same probability had been priced at 60% – even as details remain elusive on how such an extension could be achieved.

Parliamentary Votes

On March 13, the UK Parliament is expected to hold two votes specifically. There will be an initial vote on whether to approve or otherwise a new round of revisions of Theresa May’s current deal with Europe.

However, the revisions are likely to be rejected, according to most analysts, and will result in a second vote on whether the UK should proceed with a No Deal Brexit – something which, again, is unexpected to pass.

With nowhere left to go, the UK Parliament will almost certainly hold a third vote on March 14 on whether it should seek an extension to Article 50 which will seek in turn to postpone the current exit date of March 29.

It remains unclear, however, how parliament will decide on a time-frame for such an extension – which will also require approval from the EU’s other 27 member states.

Doubts also remain on the ability of an extension to materialise after French President Emmanuel Macron’s recent comments on this latest Brexit drama. Macron has suggested that France may reject an extension to Article 50 if no clear objective for such an extension is given, seemingly oblivious to the fact that such an extension is being sought precisely because there is as yet no clear direction on where Brexit is heading.

Second Referendum Taking Back Seat

As Brexit’s major players now focus in on postponing the current scheduled exit date, odds on a second referendum have quietly been receding in the background.

Smarkets’ prices on whether a second referendum will take place before year-end 2020 have shown a marked fall in a YES outcome over recent days.

Priced at 33% in late February after comments by Labour Leader Jeremy Corbyn that appeared to favour such a move [corresponding to odds of 2/1], trading is now hovering at just over 25% as of writing [corresponding to odds of 3/1], reflecting a similar fall-back in prices amongst most British bookmakers over the same period.