UK prime minister Boris Johnson has told Leo Varadkar that a No-Deal scenario ‘would be a failure for which we would all be responsible’. This comes with the prime minister writing a letter to the EU requesting a potential extension to the leave deadline, but adding a ‘not really’ caveat, and looking likely to ignore No-Deal-blocking legislation. After relinquishing her whip in protest, Amber Rudd follows a growing number of her peers in leaving government. There shouldn’t be too much mourning, however. Her position in the DWP will be taken over by Therese Coffey, who will likely push the disabled and vulnerable deeper into poverty with the same zeal as her predecessor. On these updates, Sterling dipped as markets opened on Monday morning – this gave the FTSE a lease of life.
Speaking on market movements and political ongoings, Spreadex market analysts Connor Campbell stated,
“Having spent a good portion of last week rallying in the face of Boris Johnson’s political problems, the weekend’s developments haven’t been greeted with as much glee by the pound.”
“Amber Rudd’s gone, with potentially more resignations to come, further weakening the Prime Minister’s hand. Monday should also be the day that sees the Benn ‘no-deal’ bill – which would likely require the government to ask for a Brexit extension – receive royal assent, snuck in just before Parliament is prorogued. In theory, then, there are a fair amount of positives for the pound to work with.”
“Instead sterling fell half a percent against both dollar and euro, tumbling to $1.224 and €1.1097 respectively – well off the lows struck on September 3rd, but nevertheless lacking the glint in its eye it displayed at its giddiest last week. That might be because Boris Johnson could well ignore any attempts to avert a no-deal Brexit by refusing to ask Brussels for a delay, something that would likely cause a legal challenge by the growing forces that oppose him. Such uncertainty is, of course, the pound’s kryptonite, hence explaining its early losses.”
“To add to its anxiety, the currency has to go through the data-wringer this morning. The monthly UK GDP reading is expected to rise from 0.0% to an exhilarating 0.1%, while the manufacturing and industrial production figures are both set to fall to -0.3%.”
“While the pound frets, the FTSE was able to fling itself back above 7300 with a 0.5% increase. That meant it outperformed its Eurozone peers; the DAX added 0.3% as it nudged to a fresh 6-week peak, with the CAC up just 0.1%.”
Other news and macro financial updates have come from; Jo Johnson quits, Hilary Benn’s Brexit delay bill, Parliament being prorogued, No-Deal Brexit preparations, UK GDP during the second quarter, the London Stock Exchange Group (LON: LSE), and analysts’ outlook for markets and currencies.