May's Brexit deal set to fail as Brexiters 'wholly unconvinced'

Theresa May's deal looks likely to be struck down in the House of Commons on Tuesday evening after the influential European Research Group of Brexiter Tory MPs openly refused to back it.

After analysing the assurances secured by Theresa May from her meeting with European Commission president Jean-Claude Juncker overnight and the advice offered by Attorney General Geoffrey Cox, the ERG's so-called "star chamber" of legal eagles said they did not feel it met the government's own standards.

Tory MP, Bill Cash, leader of the group, said: "In the light of our own legal analysis and others' we do not recommend accepting the government's motion today."

Mark Francois, vice chairman of the ERG, said he was "wholly unconvinced" by the deal and added that many of his colleagues felt the same way.

Cox's assessment was that the legal risk associated with the Irish backstop "remains unchanged", with the UK having “no internationally lawful means" of extricating itself should push come to shove.

Ranko Berich, head of market analysis at Monex Europe, said : "we are now back to a base case where May’s deal is rebuffed and she is forced to seek an extension. In short, we are back to square one and sterling volatility will continue until the market gets some hint of what May’s next move will be - and the margin of tonight’s likely defeat will be key."

Meanwhile, JR Zhou, market analyst at Infinox, said markets were "convinced" that the deal does not have the numbers to pass and added that May's speech to the Commons "has now been thrust firmly into Hail Mary territory – a last-ditch effort to sell a seemingly unsellable deal to MPs".

While the majority of analysts seem confident that May's deal will once again be shot down, Alastair George, chief investment strategist at Edison, argued on Tuesday morning that the EU's overnight concessions might be enough to win over a significant amount of MPs.

"We believe this deal has a chance. The political influence of Conservative Brexiteers may be at something of a peak, having secured a significant concession from the EU. In addition, there is a substantial risk that further delays would ultimately lead to no-Brexit. Furthermore, despite hard-core Brexiteer’s professed willingness to undertake a no-deal exit from the EU, the political reality which all are fully aware of is that there is no majority for this route in Parliament," George said.