The wave of optimism from last Tuesday following the Supreme Court ruling appears to be short-lived as the British pound is set to close the week in negative territory for the second consecutive week (-1.26% week-to-date). Indeed, following the UK Supreme Court ruling, which concluded that PM Johnson’s suspension of Parliament was unlawful and therefore null and void, it appears that the options stay rather scarce for UK MPs to take actions. Furthermore, signs of leadership fragility in the UK will probably maintain EU leaders on the edge when it comes to negotiating new terms with its trading partner, despite a softening in stance concerning the Withdrawal Agreement. As UK Parliament resumed activities yesterday, time is about to run short as the UK is supposed to provide written proposals to solve the Irish backstop in early October, before the European Council meeting on 17 October 2019 is happening. Motion of a general election still appears distant despite Boris Johnson’s defying tone while a vote for a second UK Parliament shutdown is due today, despite limited support.
Although discussions with Brexit Secretary Stephen Barclay and EU chief negotiator Michel Barnier last Friday had been cordial, it seems that not much is currently written on paper. European lawmakers still await concrete proposals from the UK that respect existing backstop conditions, thus maintaining deadlocks relating to the Northern Ireland “hard” border set in prior deal. In this political chaos, it becomes clear that GBP support stays rather sparse, putting UK consumer sentiment data at a six-year low. Focus should now turn on a potential Parliament shutdown vote amid the Conservative party conference next week and upcoming divorce proposals.
GBP/USD is currently trading at 1.2322, approaching 1.2280 short-term.
