- GBP/USD bears attacking the 20-DMA ahead of MPs returning from recess.
- Conservative MPs have been warned not to rebel against the government.
GBP/USD has been struggling in a strong dollar environment and a weaker euro clearing out downside orders on Friday while Brexit headlines continue to roll in as markets await parliament to return after recess. The pound is trading in the 1.2139 and 1.2160 range at the start of the week while losing trading conditions should be expected with the US holiday.
Brexit is back on the agenda
The latest update on the Brexit front is that Conservative MPs have been warned not to rebel against the government as opposition MPs plan a law to stop a no-deal Brexit. MPs return from their summer break for just a few days, as Parliament will be prorogued the following week. “Opposition and rebel MPs will do everything they can to frustrate Boris, including trying to cancel prorogation and demanding an extension to Article 50. But like this past week, expect an extreme, proactive response from No.10. An election may be in sight by week-end,” analysts at TD Securities explained.
A senior source from the whips office – which ensures MPs vote in line with the party – said rebels would “destroy” their Brexit negotiating position, BBC News has reported today, “Rebels will have the whip withdrawn and be deselected, the source said. It comes as Labour’s shadow cabinet is to meet on Monday to finalise plans aimed at stopping no deal.”
On Sunday, Prime Minister Boris Johnson discussed with his whips plans for dealing with potential rebels. The senior Conservative whips office source said if Tory MPs “fail to vote with the government on Tuesday they will be destroying the government’s negotiating position and handing control of Parliament to Jeremy Corbyn”.
“Any Conservative MP who does this will have the whip withdrawn and will not stand as Conservative candidates in an election.”
Rebelling will be classed as voting against the government or abstaining.
There is a chance of a deal on 17 October – the date of the next EU summit – “only because Brussels realises the prime minister is totally committed to leaving on 31 October”, the source said.
“All MPs face a simple choice on Tuesday – to vote with the government and preserve the chance of a deal or vote with Corbyn and destroy any chance of a deal.”
GBP/USD levels
GBP/USD dipped back to test below the 20-day moving average at 1.2153. “Provided this holds the downside, we look for recovery to the 55-day ma at 1.2384 and the June high at 1.2784,” analysts at Commerzbank argued.
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