A revised and watered-down deal getting through is probably the most likely scenario at the current time and a much softer Brexit seems to be the current expectation in markets. This scenario would require some kind of alignment with the EU single market regulation to avoid a hard Northern Irish border. But crucially was this what the electorate voted for in the original referendum? Politically it would be extremely messy.
“Other routes forward are being priced as lower probabilities now. There is very little chance of the UK parliament committing hari-kari and deciding that No Deal Brexit is the way to solve the current impasse. This would be economic suicide and result in a severe contraction in economic activity and a guaranteed recession. It is hard to see that this route will come to pass as there is no parliamentary majority for a No Deal cliff edge exit from the EU. Parliament will take control of the process should May fail to deliver any improved deal option and block this route by extending Article 50. So a No Deal Brexit has now morphed into a never ending Brexit.
“The only other option available is return to the electorate in some kind of Peoples Vote aka a second referendum. The probability of this is difficult to measure as many MPs publicly don’t support it. A Remain win on a second referendum would open fresh Brexit wounds (would Brexiteers demand a best of three?!) but the impact to certain financial markets would be instantaneously positive with sterling jumping. UK equities with international earnings wouldn’t necessarily jump on the news but domestic earners would fly.”