Sterling suffered further loss yesterday with GBP/EUR 2.7% lower from last Friday’s election high of 1.2080. This is due to the fact the PM Boris Johnson has remained committed for fulfil his campaign pledge to ‘get Brexit done’. This has been seen as a risk as it could mean he could push Brexit through even without a trade deal in place.
PM Boris is expected to return to parliament this coming Friday after todays queen speech to put forward the bill that he struck with Jean-Claude Junker in October this year, this will all be in aid to get Brexit formally wrapped up by January 2020. If Johnson manages to do this GBP could see some gains as the possibility of a no deal Brexit could become little to no chance.
The pollical editor of The Spectator, Jams Forsyth, said on Wednesday, “the government intends to get the withdrawal agreement through the House of Commons by January 09. However, the European Parliament will not vote on the deal until Wednesday, 29 January”. This would pave the way for another 11-month period with negotiations between Westminster and Brussels. During this time, it is thought that sterling will predominantly be guided by economic data releases.
On Monday, ITV New reported that Boris will put forward an amendment to the withdrawal agreement as soon as this Friday to “Legally Prohibit” any further delays to the UK’s Departure from the EU. A Vote is expected as soon as parliament returns this Friday. This has been seen in a negative way by the market and across the news which has seen weakness in the GBP as a result. On Tuesday Michael Gove, came out and said that the decision would not lead to a no-deal Brexit and the “Deadline concentrate minds”.
Following last weeks fall for the pound against the euro, the euro has already seen some gains back as a result of Brexit related issues. The EUR has also seen gains against the USD due to the weakness on the trade deal between the US & EU.
There have been recent signs of strength in the recent Eurozone data which has boosted the currency. German Business sentiment stats from the IFO cam in higher than forecast which was 5.9 to the actual 6.3.
On Wednesday the dollar rose against the euro by 0.23% but the currency has struggled to stay above its 2---day average of $1.115. The USD was also 0.39% higher against the GBP due the Brexit uncertainty in the UK.
Another reason for the rise in the USD is because of the economic data that was released on Wednesday which decreased the chance that the FED Reserve would continue it’s rate cutting cycle in 2020.
Over night a vote to impeach President Trump was put through the house of representatives with the house voting to impeach the standing president, it’s only the 3rd president for this to happen to, although it is thought he wont be removed from office due to the senate being republican dominant. The news hasn’t seemed to effect the markets substantially although sterling has this morning gained on the USD.
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