Uncertainty remains high with outcomes that could have consequences beyond the UK.Having secured formal approval of the divorce deal from EU leaders on 25 November, Prime Minister Theresa May now faces the far bigger challenge of securing UK parliamentary approval by mid-December. Both political and economic uncertainty could remain elevated until the 29 March deadline.The tail risk of a no-deal Brexit on 29 March remains high, although there is still room for alternatives, including an extension of the March deadline if new elections are called. There could also be a second parliamentary vote on the divorce deal. Although there is considerable uncertainty, our base-case scenario is that the British parliament ultimately approves May’s divorce deal (or at least an amended version of it),

But significant political challenges lie ahead before the 29 March deadline for Brexit. Sterling likely to be in the spotlight for several months.Theresa May’s cabinet has approved her divorce deal with the European Union (EU). A few cabinet secretaries have resigned, including Brexit Secretary Dominic Raab because the deal keeps the UK in a transitory ‘customs union’ with the EU, which in his view continues to give the EU too much influence on UK affairs.The next step is formal approval of the deal by EU leaders at a 25 November summit. The biggest challenge facing May’s deal is UK parliamentary approval by mid-December as the ‘hard Brexiteers’ within the Conservative party oppose it. The Labour party also rejects the deal and wants new elections instead, even though a small group of