With the proroguing of Parliament putting a spanner in the works of yesterday’s Sterling rally, a trifecta of defeats for Boris Johnson last night made sure the currency didn’t dip as markets opened on Tuesday morning.
Speaking on the Sterling and market movements this morning, Spreadex Financial Analyst Connor Campbell said,
“With Parliament now suspended – if only after another evening of crushing defeats for Boris Johnson – the pound was in a more contemplative mood on Tuesday.”
“As predicted, the Benn bill – requiring, in effect, the PM to seek a Brexit extension – received royal assent on Monday. Ditto, Johnson lost his 2nd attempt at forcing a snap election, once again lacking the two-thirds majority needed to send Britain to the polls. Slightly more uncertain was MPs’ bid to force the government to publish the no-deal-detailing Operation Yellowhammer documents; yet even that ended in another humiliation for the Prime Minister, with the Commons voting 311 to 302 in favour of said documents being made public.”
“Broadly, then, it was a pound-favourable evening, with a pro-deal parliament doing all it can to prevent a no-deal government from getting its own way. Well, all it can to a point – Parliament has still been prorogued, a 5-week pause that ties the hands of MPs until October 14th. It’ll be that fact preventing the pound from continuing its recent rally, instead leaving it down 0.1% against the dollar and flat against the euro.”
“Downbeat factory data out of China weighed on the European markets after the bell, having already soured the Asian session. The losses were manageable, however; the DAX and CAC fell 0.3% and 0.4% respectively, while the FTSE dipped 0.2%, the indices perhaps avoiding anything worse due to the prospect of some ECB stimulus on Thursday.”
In addition to Brexit-induced uncertainty, liquidity conditions continue to be preserved by central bank accommodative monetary policy. Fears surrounding bond markets remain – stability remains pinned on steadiness in the credit market.
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.
