Sterling has managed to hold onto much of its gains from the past week and a half, despite the defeat in the House of Commons for Boris Johnson on Tuesday. He had hoped to fast track his Brexit Withdrawal Bill, meaning that the UK would leave the EU as planned on the 31st of this month but despite receiving indications of support for his deal within Westminster, parliament has forced Johnson to pause his Brexit plans.
Brexit supporters hoping for the departure on the 31st may be disappointed, but one thing we can take from the past week is that PM Johnson’s newly negotiated deal has been received well by many staunch Brexiteers such as the ERG Group for example. The pound has been buoyed by the news of his arrangements and the Governor of the Bank of England, Mark Carney has also announced that he thinks the deal will be positive for the UK economy.
The next steps in the Brexit process surround whether or not all EU leaders will agree to the Brexit extension requested begrudgingly by Johnson last Saturday (he didn’t sign off the letter), and if so, how long will they accept an extension for? PM Johnson and Labour Leader Jeremy Corbyn yesterday had talks regarding the Brexit Bill timeline, but they broke down, with chances of a general election increasing according to bookies. There are also talks of the new extension, should it happen, to be a ‘flex-tension’ after Irish PM Varadkar alluded to this yesterday along with Guy Verhofstadt, the European Parliament Brexit co-ordinator.
2019 has been a particularly tumultuous time for European politics. Not only is the trading block having to deal with the departure of one of the Eurozone’s key economies, the UK, but a number a tense situations have arisen which could impact EUR exchange rates should they continue. There are the issues within France regarding the weekly protests by the Gilet Jaunes which has impacted the French economy. Now the issues in Catalonia have surfaced once again as Catalan leaders hope to receive a boost to their independence drive early next month. There will be an election in the region on the 10th of November, and after some shocking scenes circulating on social media following the protests over the jailing of 9 Catalan separatists, the parties in favour of independence will hope to gain over 50% of the vote once again.
Later today could be busy for EUR exchange rates as the ECB will release its interest rate decision and subsequent statement. These updates will be released around lunchtime, and no changes to the interest rate are expected.
Cable (GBP/USD) has dropped off from its 5 ½ month highs reached earlier this week, as UK MP’s blocked PM Johnsons plans to fast track the UK’s Brexit before the end of the month. Yesterday the pair steadied below 1.29 after testing the 1.30 level which could continue to act as a resistance level as we saw earlier in the week.
Perhaps one of the key topics out of the US at the moment revolves around the Democrat Party led plans to impeach US President Donald Trump. The impeachment inquiry is focussed on his request to Ukrainian Leader Volodymyr Zelensky to investigate Joe Biden who he see’s as a key rival in the Presidential elections next year. This request would be for Trump’s personal benefit and therefore it’s unlawful, and the inquiry threatens his presidency. Reuters reported this week that support for his impeachment is increasing amongst independents, so its worth following if you have a US Dollar transfer upcoming.
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