We trudge on with the Brexit developments this morning. As expected, the bill for a Brexit delay was passed in the House of Commons. The pound favours buying more time, as theoretically this allows for discussion to find footing. However, after three years and little to speak for, it’s hard to put belief in this.
Boris Johnson’s plan to force the hand was shot down as he lost the vote for a snap election. At this point, this outcome is still expected, however, Johnson’s idealistic timeframe of 15th October may not become a reality with Corbyn stating that he will not accept an election before the 31st October.
Although we have seen the pound’s political bias through its movement pattern – no-deal depreciation, extension elevation – markets are still hugely cautious since there remains no logic or fundamental reasoning for the movement and the outlook for the pound remains murkier than ever. Finding opportunity in short term movement may be the strategy for immediate requirements while the markets still fight to forecast anything with conviction.
Meanwhile, it’s reported that the US and China have agreed to meet in early October. The haven JPY has seen a drop as risk sentiment settles from this, as has the USD, with EURUSD jumping on market open across 1.1040. Riksbank held its interest rate unchanged and, with a more hawkish stance this morning around the withdrawal stimulus, the SEK has gained on market open with some possible near term upside being seen.
The focus throughout today will, of course, be on developments in parliament and any announcements as a result. There is also a flurry of US data coming out this afternoon with employment reports and Purchasing Manager Index data due. The dollar will likely track this closely.
Have a great day.