Finally, after all the back and forth, clauses and tests, the Labour party finally agreed to back an early general election on December 12th to break the Brexit stalemate in Parliament.
At a press conference, alongside his shadow cabinet, Corbyn exclaimed that he was happy to back an election now “as no-deal is off the table”. In reality, his hand had been forced by the Lib-Dems and SNP and more likely than not, he didn’t want to arrive last to the party.
For the pound, the December election presents a fork in the road for further gains, one leads on towards a bright and optimistic path, the other, seemingly back into the woods.
Essentially, the first scenario would be that the current withdrawal agreement passes through Parliament with the Conservatives at the helm. As the bill has already passed at second reading in this Parliament, if the Conservatives returned a majority here, then the market could expect this to fly though and “Get Brexit Done” with a deal.
The second, muddier path would be if no majority is again returned and the bill is ditched – meaning a completely new bill process would begin, necessitating a request for a new EU extension that Donald Tusk made clear may not be forthcoming a third time.
Across the pond, the US Federal Bank looks poised to cut rates by 0.25%, much to President Trump’s delight. As always, the cut is already priced into the market – the press conference afterwards on the Fed’s plans for 2020 will be the key mover for the dollar as we enter an election year.
Have a great day.