GBP/USD: Outcome of UK’s parliamentary vote on Saturday to dictate the drivers of the coming sessions – Rabobank


According to analysts from Rabobank the chances of UK Prime Ministre Johnson’s Brexit deal passing through parliament are on a knife-edge and the near-term outlook for GBP is binary.

Key Quotes: 

“The outcome of the UK’s parliamentary session on October 19 will dictate the drivers of the pound for the coming sessions. If MPs pass PM Johnson’s Brexit deal, GBP’s relief rally is likely to be given another dose of vigour. If they do not, focus is likely to switch to the prospects of an early general election. In these circumstances it is possible that the perceived chances of another Brexit referendum or a no deal Brexit could also increase once more. A relief rally is likely to see GBP/USD sailing through the 1.30 level, another round of political volatility could see cable back at last week’s lows around 1.22.”

“If Johnson’s deal is rejected by parliament the pound can be expected to fall. Assuming that the government does not attempt to manipulate that outcome into a green light for a no deal Brexit, downside potential is likely to be limited, with the October lows in the GBP/USD 1.22 area likely to provide solid support.”

“Labour’s Corbyn has so far twice refused to comply with Johnson’s request for an early election given the perceived risk that a victory for the PM could increase the chances of a no deal Brexit. Now that the Benn Act is in place, it is a reasonable assumption that opposition MPs would allow an election to take place. At that point GBP is likely to switch its attention to the opinion polls.”

“If political uncertainty does decline over the medium-term GBP will revert to paying greater attention to economic and interest rate events. In the near term, the risks to the pound are binary dependent on whether or not Johnson’s deal passes through parliament.”
 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!


Latest Forex News

Editors’ Picks

EUR/USD: Bullish breakout faces next challenge at 1.1150

The EUR/USD pair closed the week at around 1.1100, its highest settlement in two months, as poor US data coupled with a relief rally of high-yielding assets ahead of the close. Several European countries will start the week celebrating a holiday.

EUR/USD News

GBP/USD: Post-Brexit relationship taking centre stage

The GBP/USD pair hit 1.2393 on Friday, a two week high, retreating sharply from the level ahead of Trump’s speech to later recover on relief and settle at 1.2345. Cable is technically neutral, although the bullish potential seems limited.

GBP/USD News

Cryptocurrencies: $348M in matured derivatives boost the market

Futures and options contracts' expiration brings a wave of volatility to the crypto market. Ethereum takes advantage and attacks resistances in the market dominance chart, Bitcoin goes back. Ripple disappoints despite regaining the third place in market capitalization.

Read more

Canada's economy falls by 8.2% annualized in Q1, better than expected, USD/CAD shakes

The Canadian economy squeezed by an annualized rate of 8.2% in the first quarter of 2020, better than -10% expected. Quarterly, Gross Domestic Product (GDP) squeezed by 2.1%. Most of the downfall occurred in March, with a drop of 7.2%, better than 8.5% projected. 

Read more

WTI drops 4% and eyes $32 mark amid risk-off, weakening demand

The selling pressure around WTI (July futures on Nymex) accelerates following the break below the 33 level, as bears now target the 32 support zone heading into the key US macro data and US President Donald Trump’s response to the Hong Kong issue.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures