Last night UK Prime Minister Boris Johnson suffered numerous blows in the Commons when MPs backed a bill which aims to block a no deal Brexit. Shortly after Boris Johnson called for a snap election however he failed to achieve two thirds of the vote that he needed under the Fixed Parliaments Act to trigger the snap election.
After 3 years of Jeremy Corbyn pleading for a General Election, the leader of the opposition has made it clear he will only support a General election once the bill to bloc a no deal Brexit has Royal assent. In addition, Lord Ashton of Hyde announced in the early hours of the morning that the Bill will be passed through the House of Lords by Friday, and then it can gain Royal Assent shortly after.
The Bill put forward by Labour’s Hilary Been states that Boris has until the 19th October to achieve either a deal that is passed through Parliament or for MPs to vote for a no deal Brexit. If either is not achieved, then the Government has to apply for an extension to Article 50 to the end of January 2020. It now appears that a General election is not if but when. History tells us that election tends to put pressure on the currency in question. However, history also tells us that overtime extensions to Article 50 tend to strengthen the pound as we come one step further away from crashing out of the EU. It’s difficult to say how the pound will react in the weeks to come to the political uncertainty however I expect further volatility is on the horizon.
Eurozone GDP is released Friday morning and should be watched closely by any client converting euros. The European Central bank have hinted to initiating another round of quantitative easing in the upcoming months. If GDP fails to impress this could be the final nail in the coffin and the ECB may act on the 9th September.
Historically on the first Friday of every month, we may experience a volatile trading period when the US releases their latest Non-Farm Payroll numbers coupled by the Unemployment numbers. Non-Farm Payroll numbers are set to be released at 158k and Unemployment is set to remain strong at 3.75%. Any deviation can make Friday afternoon trading session interesting, especially if the numbers fail to impress as it will give the President Donald Trump more ammunition to use to try and persuade the FED to keep cutting interest rates.
The Canadian dollar had a strong finish to Wednesday’s trading session against the Greenback and sterling as the Bank of Canada’s recent policy decision had no hints that further interest rates cuts are on the horizon. With interest rates remaining healthy at 1.75% in comparison to other leading nations this is good news for clients selling Canadian dollars. To finish the week for the Loonie, Unemployment and Net Change in employment are both set to be released after midday Friday.
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