— This is the script of CNBC's news report for China's CCTV on September 4, 2019, Wednesday.
The vote's result on Tuesday can be seen as a hit to British PM Boris Johnson, who takes office not long time, investors' appetite for risk has also been curbed by more uncertainties in Brexit.
In Tuesday trading, European 3 stock indexes closed down, as well as US stock market and gold's closing price hit a 6-year high. In FX market, Pound against U.S. dollar once down below 1.20 to 1.1967, which is the lowest level since Oct 2016.
The vote's result means there is a no-deal Brexit, and that may bring volatility to economy and financial order, so it didn't get enough supports from Westminster, meanwhile, opponents are trying to avoid this situation.
We can see that pound rebounded after declining; its current exchange rate against U.S. dollar has increased above 1.2.
The meaning of the Tuesday vote is it makes another vote held on Wednesday more predictable, in this vote, MPs will decide if they want to push forward with legislation to avoid withdrawing the U.K. from the EU without a deal on October 31, but request another 3-month extension to the U.K.'s departure date, to January 31, 2020. Opponents of no-deal Brexit got a leading advantage of 27 in the vote, so they have a high probability to win again on Wednesday vote. Then how will the situation evolve after that is key. Stephen Gallo, European head of foreign exchange strategy at BMO Capital Markets, outlined CNBC 2 scenarios:
the government refuses to request an extension, instead engineering a no-confidence motion in itself, if the government loses the no-confidence vote, announces new elections, under this circumstance, Britain may leave EU without a deal. The second scenario is the government wins the vote of no-confidence motion or the MPs refuses to vote in favor of early elections but the government still resigns, in this case, the opposition would probably seek to re-form a government.
Deadline for Brexit has been extended twice, Johnson also said clearly that he'd rather to hold election, instead of extending Brexit again, but that is what he doesn't want to see, this situation is also seen as lose-lose scenario.
Boris Johnson，British Prime Minister
I don't want an election but if MPs vote tomorrow to stop the negotiations and to compel another pointless delay of Brexit, potentially for years, then that will be the only way to resolve this.
I can confirm that tonight we will are tabling a motion under the Fixed Term Parliament Act.
Dominic Grieve，Conservative MP
"If the legislation goes through, my hope would be that it will force the prime minister and sections of my party to reset the discussion, and to start thinking sensibly about a way out of the hole which we have succeeded in digging for ourselves as a country,"
"My own personal view is that the sensible course of action is to have another referendum which could be determinative. Failing that, either there has got to be a deal that is acceptable to the House of Commons that we leave on those terms, which looks very elusive, or potentially we could have a general election, but my anxiety with that is that a general election is at great risk of delivering another hung parliament. If that happens, we're back to square one."
The final direction of Brexit is still up in the air, analysts are hard to forecast something at this moment, all depends on whether Johnson could make a compromise plan with MPs within this important week. We will keep a close eye on this issue.