GBP/USD before the open, what's in store?

GBP/USD ended on Friday with a surge, sustaining the bid from a low of 1.2839 to a high of 1.2979, polishing the week's positive bias having climbed from a low of 1.2469 on the 10th October. Indeed, Brexit remains in the limelight and will be a major theme for the start of this week - although, ‘Super Saturday’ turned into an anti-climax.

Brexit saga continues

On Saturday, the UK Parliament passed an amendment that forced PM Boris Johnson to ask for an extension, confirmed by EU’s Council President Donald Tusk. However, UK Priminster Johnson still aims to pass the Withdrawal Bill this week, splitting the odds and making for a disjointed sentiment and subsequent action from traders. 

"The Parliamentary vote poured cold water over the excitement around the potential end to the Brexit saga, leaving PM Johnson and his government to devise a new way forward while senior EU officials mull over the UK’s extension request," analysts at ANZ explained. 

So, forced to administer an extension, we still have a possibility that Johnson can get his deal though. "The appeal of Johnson’s current deal is that it doesn’t specify what sort of Brexit he eventually seeks to achieve, which allows for an unusual alliance of Labour Leave MPs and the Tory ERG. This dynamic may change when the deal is scrutinized or even amended in the next week," analysts at Rabobank said. 

So, let's see if the government can press on this week, trying to get the required legislation through the Commons at breakneck speed. The risk as analysts at Rabobank explained is that the current withdrawal agreement will prove to be the precursor of a hard but managed Brexit in December 2020. "The EU will wait with their decision on the extension to allow for events to unfold in London."

GBP/USD levels: