Johnson Raises Stakes, Pound Holds the Lows
The UK may be headed for an October 14 election. The pound fell on the news to start the week while the yen led the way on trade-related uncertainty. ISM manufacturing is due up next. There are currently 3 Premium trades open (FX, commodity and index), all of which are currently in the green. Feel free to use the EUR GBP USD calculator below found in the lower right hand side of our homepage to try out the various scenarios for EURUSD, EURGBP and GBPUSD.
Boris Johnson raised the stakes of a parliamentary vote on Tuesday aimed to block a no-deal Brexit. If he's defeated he will bring forward a motion on another vote Wednesday to trigger an election.
The pound jeered the fresh uncertainty with cable testing new lows for the year at 1.1959 before regaining 1.2030s. The outcome of both votes is entirely unclear. If Johnson fails in the first vote, it would take a two-thirds majority to trigger an election. If that fails, it puts the UK into an even deep quagmire.
Ashraf tells me he's keeping an eye on GBP's 8-year cycle as well as key developments in EURGBP.
Johnson already sounds like someone who is playing the blame game and preparing for an election. He's blaming 'remain' MPs for an impossible negotiating position. Ultimately, an election may create a clear path forward for the UK but in the short-term, it adds to an already-uncertain situation.
Elsewhere, the state of play is also murky. Rumors that Trump might delay tariffs help risk assets late last week but he didn't and that put markets in a sour mood. The continuing fall in the yuan, Hong Kong protests and capital controls in Argentina also added to unease.
Brexit headlines threaten to dominate trading Tuesday but it's also the first trading day of the new month for North American traders. Data includes the ISM manufacturing report and construction spending. Hawkish dissenter Boston Fed hawk Rosengren will also speak at 2100 GMT.
|FOMC's Rosengren Speaks|
|Sep 03 21:00|
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