Pound Tumbles As Attorney General Trashes May's Last-Minute Deal With EU

Update 3 (9:10 am ET): The "Star Chamber", a group of ERG lawyers, said May's agreement with the EU doesn't meet the tests that her own government set.

Just the latest sign that May's deal will likely be defeated by a wide margin.

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Update 2 (8:30 am ET): As expected, the DUP has confirmed that its 10 MPs will vote against the deal, but added the caveat that they will listen to the AG's statement, which he is making as we speak:

So far, he has basically affirmed what he said in his released advice: that the EU would be acting in 'bad faith' if it tried to keep the UK in the backstop protocol indefinitely, and though that risk has been significantly reduced, there's no explicit legal provision stopping it from doing so.

The legal risks are unchanged, Cox said. The question now is a political one.

Watch the proceedings here:

Of course, the notion that the Brexiteers will simply decide to 'trust' Europe now after all of this back and forth...just isn't realistic.

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Update: And here's the final nail in the coffin for May's Brexit deal.

After striking a surprisingly conciliatory tone last night, ERG leader Jacob Rees-Mogg, effectively the leader of the Brexiteer faction in Parliament, has savaged May's deal: "The unilateral declaration doesn’t add anything because it simply says we could ask to leave the backstop. We have always been able to ask to leave the backstop. That is not in any sense an improvement or a development."

Another Tory MP described May's concessions as 'an arrow through the heart.'

This certainly isn't good.

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For a brief moment, the notion that Theresa May had finally wrested a crucial concession from the EU - namely, that it had agreed to grant the UK "legally binding assurances" that it could unilaterally exit the Irish Backstop in the event of a deal deadlock - seemed too good to be true.

And as it turned out, it was.

After issuing a tensely anticipated legal advice on Tuesday, Attorney General Geoffrey Cox contradicted May and the rest of her cabinet by determining that the interpretive document offered the UK by the EU would grant no legally guaranteed right to exit the backstop.

In other words, Cox has confirmed the objections of May's eurosceptic critics, who alleged last night after the text of the agreement had been released that nothing had changed.

While the risk of "bad faith entrapment" in the Irish Backstop had been "reduced" thanks to May's concessions, Cox couldn't rule it out entirely.

The advice virtually ensures an extension of the Brexit deadline.

The news sent the pound tumbling as it practically guarantees that a second vote on May's deal, expected late Tuesday (though it may yet be cancelled), will fail.

Traders held out hope overnight after several key Brexiteers, including the leaders of the DUP and ERG leader Jacob Rees-Mogg affirmed that May's deal looked promising and that they would withhold judgment until they had a chance to carefully review the text, and consider the Attorney General's legal advice. This seemed to outweigh doubts expressed by Brexiteers including Steve Baker, who claimed that the latest concession left the deal essentially unchanged.

Of course, this is just the latest indignity for the long suffering pound.

A DUP source affirmed on Tuesday that they didn't see how the party could support the deal following Cox's advice. As a reminder, here's what May would need to pass the deal (courtesy of @Ransquawk): PM May needs 318 votes to pass her deal, assuming all lawmakers vote.

Ideally, these would include:

  • 10 DUP members
  • At least 65 ERG members
  • Up to 40 Labour leave votes
  • 4 Independent votes

Cox is expected to address the commons at 12:30 GMT (8:30 ET), before May opens the debate on the meaningful vote for her deal at 1 pm GMT (9 am ET), with the vote set to begin at 7 pm GMT (3 pm ET).

Read Cox's full legal advice below:

190312 - Legal Opinion on Joint Instrument and Unilateral Declaration Co.. 2 by Zerohedge on Scribd