Pound soars as opposition lawmakers seize control of Parliament today

Sep 4, 2019

The Pound has soared today as fears surrounding a no-deal Brexit have receded following events in Parliament overnight.

Last night, lawmakers opposed to Boris’s Brexit plan won the vote (328 vs 301) to seize control of today’s business in Parliament, which gives them a chance to pass a bill today to extend Article 50 by three months (to 31st Jan 2020).

Even after Boris threatened to deselect any Tory rebels, a total of 21 Tories still voted against him in last night’s vote. The bill will be introduced this afternoon and voted on this evening. It’s now given a good chance of passing but the question will be whether they will have enough time to turn the bill into law before the government shutdown.

If the bill passes later, Boris has tabled a motion calling on an election (likely for the 15th Oct). He would need two-thirds of Parliament to agree to this snap election though. It seems Parliament will not go along with this until they’ve taken the immediate threat of a no-deal off the table, which would be another setback for Boris. This has given another boost for those wishing for a no-deal Brexit to be avoided.

So, today the Pound is finding some salvation but the situation is still very fluid and there many complications ahead. No-deal Brexit risks are still on the table and things can change very quickly.

In other news, news that the Hong Kong leader will fully withdraw the contentious extradition bill points towards there being some resolution on the public unrest there. Markets have generally been more upbeat and risk appetite has increased since the news came in. This has boosted risk currencies such as the AUD/NZD and weakened safe haven currencies such as the Yen and CHF.

As a result, the GBP/USD bounced off its 3-year lows and is up over 2-cents from yesterdays low. The GBP/EUR have pushed up by over 1% and trade close to the best levels since the end of July.