Another Politically Heavy Week for the UK

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It was another politically heavy day in UK politics yesterday. Boris Johnson was denied a General Election for the second time before Parliament was closed for five weeks. In response, Johnson criticised the opposition saying they ‘think they know better’.

Further purporting that Labour are trying to ‘delay Brexit without further reference to those who voted for it’ and had ‘twice denied people their say’.

Jeremy Corbyn stated he is not ‘prepared to risk the disaster of inflicting a no-deal’, he did not trust the government to obey a law taking no-deal off the table. Earlier PM Johnson visited Irish PM Leo Varadkhar commenting a no-deal would be a ‘failure of statecraft for which we will all be responsible’. Suggestions therefore that could break the Brexit deadlock and get the elusive deal; the key Irish backstop omitted however.

Importantly, Parliament has passed a bill that demands the PM returns to Brussels to ask for a delay, if he cannot get a deal through parliament by 19th October gaining royal ascent.

There was also a surprise announcement from the speaker who said he would step down on the 31st of October: John Bercow had been criticised for being biased towards the remain campaign. Andrea Leadsom Conservative comments that the Tories would break convention and stand a candidate against him in the next election, ultimately the key driver.

UK GDP figures surprised the markets and delivered above expectations: The UK economy having grown in July, following stagnation in June and allayed fears of a recession within the UK.

GBPUSD

Sterling saw a 1% move higher yesterday morning after UK GDP came out higher than expected. This saw cable move from 1.2230 up to as high as 1.2380 in the later afternoon, Sterling was also boosted by views within the market that there may now be a softer Brexit than was initially being priced in. As a result, we may see a breakout above 1.24, which is a key resistance level on the pair. This could present attractive buying opportunities and target orders for importers.

GBPEUR

Yesterday we saw GBPEUR move higher in morning trading as traders bought the Pound following better than expected GDP figures. The current support level on the pair is 1.10, with resistance at 1.1230. Currently the pair is trading at 1.1160, which is up significantly from last month’s lows of 1.07.

EURUSD

The dollar weakened against the Euro yesterday with the pair up 0.5% from Friday’s session. This is likely to follow the weaker-than-expected employment figures we saw from the US, the pair is now off the yearly lows. The Euro could come under pressure against with data continuing to play an important role. EURUSD is currently trading in the mid 1.10’s, with immediate support at 1.11, a break above that could see 1.1150 back in sight.

Initial support is at 1.0962, which was the low point on Friday – the lowest since 2017 – and also a support line back then.

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