- GBP/USD has dropped significantly to the 1.23 handle and is trading down over 1% to a low of 1.2349 from a high of 1.2496.
- Boris making statement live NOW.
GBP/USD had been on step advance since the beginning of September from a low of 1.1958 which was grounded on the 3rd of September. Nevertheless, GBP is going to be volatile and should be expected to be so on the ongoing Brexit saga with headlines rolling out on a daily basis, and quite often conflicting.
For now, Boris Johnson has an almighty task in trying to get a Brexit deal approved before the 19 October deadline set by lawmakers after failing to suspend Parliament, ruled by the Supreme Court as an illegal act. Judges said it was wrong to stop MPs carrying out duties in the run-up to the Brexit deadline on 31 October. Johnson who has faced calls to resign, said he “profoundly disagreed” with the ruling but would “respect” it.
It is now very likely that Johnson will have to ask the EU for another Article 50 extension which means an election later in 2019 still looks highly likely, according to analysts at ING Bank:
“Remember, the main consequence of the suspension was that it made it harder for MPs to legislate against an October ‘no-deal’ exit. But despite these obstacles, MPs still succeeded in approving a law designed to force the prime minister to ask for a further Article 50 extension, should he fail to get a deal approved by Parliament by 19 October – This deadline leaves the prime minister with just over three weeks to find such a deal, and with an election potentially looming, there are incentives to get one.”
Given the Irish border is unlikely to be something that could be worked around in time for a deal in the next few weeks, it looks like we are heading for a general election. Should the conservatives win the majority, then a no-deal Brexit is back on the cards and hence the volatility on GBP is far from over – “Don’t forget that the EU will need to agree to another Article 50 extension, although it currently looks unlikely that Brussels would reject such a request.”
Elsewhere, we are seeing volatility everywhere. The Dollar drilled higher by over 0.70% as US yields rallied on the back of stocks correcting higher on trade talk optimism and Trump’s impeachment fears likely overcooked.
Boris to call for a general election?
Boris Johnson is now making a make a speech in Parliament and he’ll probably try once again to call a General Election – despite failing twice to find a two-thirds majority – The speech will be broadcast on BBC Parliament, Sky News and the Guardian: