Parliament was prorogued yesterday for five weeks, the Prime Minister must now get parliamentary approval – either for a deal, or no-deal – by 19 October or face the daunting prospect of requesting an extension from Brussels. Boris has previously said he would rather ‘die in a ditch’ than do this.
MPs looking to stop no deal are exploring ways to bring back a version of Theresa May’s Brexit deal plus a vote on a second referendum in the last two weeks of October, amid concerns Boris Johnson will still try to pursue a no-deal departure.
Ken Clarke, who voted against the government last week and subsequently had the whip removed, urged Johnson to “put together a cross-party alliance to get a deal through,” as he believes it could now achieve a majority with Labour MPs who regretted having not voted for it previously.
A separate cross-party group of opposition MPs formally launched a campaign to win support for Brexit via a managed deal on Tuesday.
The founders, who include Labour MPs Stephen Kinnock and Caroline Flint, Lib Dem MP Norman Lamb and former Tory MP Rory Stewart – claimed up to 50 MPs may back the plan. The new proposal would involve using parts of Theresa May’s Brexit legislation as the basis for an agreement which Boris Johnson could steer through parliament, possibly in time for a 31 October departure.
Data wise, yesterday we saw employment figures released. UK unemployment was estimated at 3.8 per cent in the period May to July, the Office for National Statistics (ONS) said, down from 3.9 per cent in the April to June period. The number of Britons without a job has fallen to a 45 year low and lower unemployment helped boost wages when bonuses are included by four per cent, a rate not seen since 2009. As a result, we have seen sterling stay buoyant against both the Euro and the Dollar.
Cable has remained above the 1.23 handle, trading just above 1.2350 for the majority of yesterday, immediate support on the pair is now at 1.23 and resistance at 1.2380. The market will be looking at progress on Brexit, with news that a cross party alliance is potentially looking at breaking the deadlock we could see near term swings higher, supported by positive UK data.
GBPEUR is likely to be driven by politics within the UK today, the pair managed to break the 1.12 level yesterday but has since dropped lower. Tomorrow we could see significant movement as the market awaits the ECB rate decision. With Eurozone growth flatlining the ECB have hinted at further stimulus and an additional cut in interest rates – the market is beginning to price in a very dovish meeting tomorrow which could present buying opportunities for importers.
The pair has remained fairly stagnant trading a tight range between 1.1030 and 1.1050 as markets wait for US inflation figures today for direction and then the significant market event from the ECB tomorrow. The next 24 hours could be key for the pair and we could see big moves following tomorrows announcement.
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