GBP/USD: Debate in parliament to leave the pound vulnerable for another fall

GBP/USD has been licking its wounds after last week's Brexit-related blows. The UK Parliament is set to debate a controversial bill that has aggravated the EU, which is expected to pummel the pound, FXStreet’s analyst Yohay Elam reports.

Key quotes

“Despite having a large majority in parliament, PM Boris Johnson's victory in passing a controversial Brexit-related bill is unclear. The House of Commons will debate the Internal Markets bill, legislation which violated the Withdrawal Agreement – as ministers openly admit. The PM seems to have changed his mind on allowing for a customs border on the Irish Sea.”

“MPs kick-off the debate on Monday, with several members of the PM's Conservative Party saying they will vote against it or abstain. The House of Commons is set to vote on amendments and the entire bill before it goes to a committee. Discussions will last all week and form part of the never-ending Brexit saga. The pound dropped sharply last week and may extend its gains if it goes through and triggers additional angry exchanges with the EU.”

“Investors cheer the comeback of the Phase 3 coronavirus vaccine trial by AstraZeneca and the University of Oxford. The project was halted last week after a participant fell ill. A rival effort by Pfizer is also gaining traction after the American pharma behemoth said it hopes to provide immunization doses by year-end.” 

“UK coronavirus cases continue rising as new restrictions are introduced. Gatherings are limited to six people and some areas are under more substantial limitations. In the US, infections and deaths are falling, albeit from a high level.” 

“Market optimism is somewhat constrained after last week's correction and ahead of rate decisions on both sides of the Atlantic later this week. The Fed is set to sit on the sidelines after announcing a long-term dovish policy shift. The BoE is also on course to wait for the government's next moves before acting. Both banks' updated forecasts – which will likely express optimism from the recovery but concerns about the virus – will be closely watched.”