Sterling below 1.20 on Brexit uncertainty
This week had promised to be eventful for the UK and the first day did not disappoint, as rumours circulated that the country may be headed for a general election.
It appeared at one stage that sterling traders were holding off for the vote, both on standing order 24 that will allow the house to debate and vote on the bill to block no-deal on 31 October and then the bill itself. But it would appear recent developments have left sterling traders with little to be optimistic about and this morning, 1.20 has fallen against the dollar.
GBPUSD Daily Chart
This is more of a psychological blow more than anything else and the currency hasn’t gone into free-fall since, suggesting calmer heads still remain, for now. But it does suggest traders are increasingly seeing no positive outcome in the near-term. In the best case we have the uncertainty of an extension, in the worst case we could be headed for no-deal or a Corbyn government, which markets appear to dislike.
It’s would appear we’re in for a week of long debates, late votes and a few surprises along the way as Parliament works tirelessly to prevent no-deal before it is suspended. Needless to say, it’s going to be a tiring week and the pound is likely to be very volatile throughout but by the end of it, we should have a much better idea which way we’re headed.
