Letwin vote sends sterling lower
Sterling on the slide, as Letwin proposal garners enough votes to push Johnson's Brexit vote into next week.
Weekend trading for the pound has seen traders react with disappointment over the passage of the Letwin proposal. This amendment raises the likeliness that we will see yet another extension, despite Boris Johnson’s claims that he would not support such an event.
For markets there are two factors in play here, with the beneficial effects of mitigating the potential for a no-deal scenario being overshadowed by the message this tells traders about Johnson's hopes of passing his bill. Much like his predecessor, Boris has grown used to rejection in Parliament, and with today’s Letwin vote seen as a proxy for the meaningful vote on his Brexit deal, markets are understandably treating this result with disappointment. The meaningful vote will likely take place this week, yet the failure to gain support from the DUP (Democratic Unionist Party) means that we are faced with another likely rejection and sterling decline. It has been clear that there is no majority in Parliament for anything other than opposition for a no-deal Brexit, and thus it is evident that Brexit could yet only occur once we have seen a general election.
A look at the weekend GBP/USD chart highlights the decline into 1.2750 support, which represents the low from Thursday. A break below that level would point towards further declines for the pound, which seem likely given the growing feeling that Johnson will fail when the vote is finally undertaken. For today, the question is whether we will see that level broken, as traders take stock amid a ‘Super Saturday’ that has been cut short.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Trading around Brexit
Find out how the UK’s exit from the EU continues to affect traders, and discover:
- The unique opportunities in a ‘hard’ and ‘soft’ Brexit
- The markets you should be watching
- Everything that’s happened so far
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
