GBP/USD – 1.20 falls ahead of parliament vote

Sterling below 1.20 on Brexit uncertainty

This week had promised to be eventful for the UK and the first day did not disappoint, as rumours circulated that the country may be headed for a general election.

It appeared at one stage that sterling traders were holding off for the vote, both on standing order 24 that will allow the house to debate and vote on the bill to block no-deal on 31 October and then the bill itself. But it would appear recent developments have left sterling traders with little to be optimistic about and this morning, 1.20 has fallen against the dollar.

GBPUSD Daily Chart

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This is more of a psychological blow more than anything else and the currency hasn’t gone into free-fall since, suggesting calmer heads still remain, for now. But it does suggest traders are increasingly seeing no positive outcome in the near-term. In the best case we have the uncertainty of an extension, in the worst case we could be headed for no-deal or a Corbyn government, which markets appear to dislike.

It’s would appear we’re in for a week of long debates, late votes and a few surprises along the way as Parliament works tirelessly to prevent no-deal before it is suspended. Needless to say, it’s going to be a tiring week and the pound is likely to be very volatile throughout but by the end of it, we should have a much better idea which way we’re headed.

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Craig Erlam

Craig Erlam

Senior Market Analyst - UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a Market Analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam