- PM Johson and the EU is where GBP traders are focussed.
- The 1.30 handle will be massive milestone for the bulls.
Its all system go on the Brexit front at the start of this week considering the timeline. As things stand, the UK is due to leave the EU on Thursday - Debate over the weekend has been mainly focused on the possibility of a general election - GBP fragility theme continues...
We have a scenario that is keeping traders on high alert given the high stakes. The latest is that Downing Street is prepared to look at other options should its plans for an election fail. Sterling is elevated on the basis that a hard Brexit seems to be the lesser possibility, but, as ever, the uncertainty is capping any upside momentum.
PM Johson to table a motion to call for a 12th December election
PM Johson is on the verge of tabling a motion to call for a 12th December election today while the balance of support is not quite favourable, up against the Liberal Democrats, SNP and an opposition leader, Jeremy Corbyn who has called the move a "stunt".
What the market looks for is the EU's 27 members decision as to whether or not to grant an extension the 31 January while throwing in the possibility of a variety of departure dates as being the 1st December 2019, 1 January 2020 the 1st February 2020. By law, Ii the EU approves the UK's request for a three-month extension, UK PM Johnson would have to accept it, under the terms of the so-called Benn Act.
"The EU could still potentially hold an 11th hour summit this week if it cannot reach agreement by written consent. One opinion from France is that an extension should be short, just affording the UK enough time to pass the Withdrawal Bill. That would intensify pressure on UK MPs, who are gridlocked by the current parliamentary make-up, but the majority do not want to leave without a deal," analysts at ANZ Bank explained.
GBP bulls in control
Its been a rocky road for GBP, but, there is a light at the end of the tunnel – What markets now wait for is 'the deal ' to properly scrutinised by Lawmakers in these next crucial day and we need to see progress made to trade a direction, one way or another. GBP/USD is on the verge of a grounded extension to the upside having rallied some 6% on a soft Brexit outcome sentiment. The 1.30 handle is a massive milestone for the bulls ahead of the May peak up at 1.3020 - likely a fragile barrier on the way to the March highs in the upper 1.33s where bulls will take control until 1.3640, Sep 2017 highs.
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