Wavering Brexit Plans Take Their Toll on the Pound

Xe Corporate UK

October 23, 2019 3 min read

We have more Brexit updates for you because of another vote in Parliament last night. Boris Johnson convened Members of Parliament in order to vote on the Withdrawal Bill, but he was forced to hold progress given the results of the vote.

The vote ostensibly supported the contents of the Withdrawal Bill that provides the legislation, but they did not support the timeframe. This rules out a 31st October leaving date and has prompted Downing Street to suggest that Boris Johnson would seek a general election. The result obliges the Prime Minister to send a letter requesting an extension and the standard would be to seek a three-month delay, but it’s clear Boris Johnson would not accept such latency. Donald Tusk, the European Council President, has already commented that he would support and recommend an extension.

So, it appears as if a short delay will now be the case – so we avoid a crashing out without a deal on the 31st October, though ‘no deal preparations would be ramped up’. We will await information from the EU regarding whether the extension is granted, and Boris Johnson will officially pause his motion to push through legislation and the programme motion. It appears that the longer the delay mooted by the EU, the higher the likelihood of an election would be.

Tabled for the coming week in Parliament should be the finishing stages of the Withdrawal Bill… but it won’t be. It appears instead that there is itinerary for debating the Queen’s Speech that was used to suspend Parliament some weeks ago.

The wavering plans have taken its toll on the Pound, which has pared gains back down to mid-1.2800s, much of this coming immediately after the vote last night. The likelihood of this continuing to ebb downwards until further information is gleaned from the EU appears high.

Across the pond, it looks as if market expectation is firming that the Fed will cut interest rates again in October, so even with the results of Brexit have ceded strength to the other side of the pair, it could be argued this upcoming rate sentiment would cap USD gains to some degree.

The GBPEUR rate is still experiencing bigger losses when compared to the GBPUSD, now trading at 1.1550 and the dominating influence of Brexit is set to continue to provide almost exclusive clues to its direction.

EUR/USD is playing out just above the 1.1120 figure at the time of writing.

Special Notes: The figure is based on the live mid-market rate, correct as of 09:20 GMT on 23/10/2019, and are provided for indicative purposes only. Live mid-market rates are not available to consumers and are for informational purposes only. The rates we quote for money transfer can be selected via the page on our website ‘Live Money Transfer rates’.

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