Amid the chaos of Parliaments’ prorogation last night, it is hard to argue that, despite getting his way and dissolving the House of Commons until the 14th of October, Boris Johnson will be pleased with the results thus far.
As Johnson watched on, arms folded tight, his government suffered its 6th defeat in one week – pretty bad going when considering Thatcher, Major, Blair and Brown kept it to 17 in 37 years. Not only has Johnson’s Plan A gone out of the window, with Johnson now legally required to ask for an extension if no deal is reached; but as seen last night, so has his Plan B – as the Commons once again refused his push for an early election pre-31st.
As general election risk has been taken off the table in the very short term, along with the threat of no-deal by the 31st, sterling has been given some room to breathe and trade above 1.1150 on the euro and 1.2325 on the dollar. The only tapering factor at the moment would be the veiled threats from the Government, who mean “to look at it very carefully, test what it legally requires and what it doesn’t require and that’s the responsible thing to do, because it’s such a bad piece of legislation.”
Whilst it is almost impossible to believe that the Government would break the law, such is the anxiety surrounding the pound at the moment, that it’s almost a shame to say it has had an impact. Couple this with the fact the general election risk has merely been delayed rather averted, and it’s clear that, despite sterling recovering in the short run, there is plenty of risk to consider.
9.30am will see the release of earnings and employment data for Britain, which, if as positive as yesterday’s growth and manufacturing figures, could see a push beyond 1.12 on the euro and 1.2350 on the dollar before the day is out.
Despite the respite offered to the pound in one of the most interesting weeks in parliamentary history; at time of writing, sterling has started to sell off the back of traders, once again, taking advantage and cashing in their bets for profit.
As always, mimicking top institutional traders, who move billions of pounds every day, is not a bad thing – fighting the trend is a quick way to lose a lot of money. Give your account manager a ring today to discuss on 02073269120.
Have a great day,