Parliament prorogue plan hurts the Pound

29th August 2019 Market Update

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🇬🇧 GBP –  The Pound fell yesterday as reports surfaced of Boris Johnson’s plan to suspend Parliament for over a month just a few days after re-opening from the summer recess in order to begin a new Parliamentary session. Despite forceful denials, markets were not fooled and concluded that it is an attempt by the Prime Minister to restrict the available time for those seeking to block a no-deal Brexit to bring the necessary legislation to be debated. As the risk of a no deal Brexit increased again, Sterling fell to a 6 day low before partially recovering in the afternoon.

Today sees no economic data being released from the UK. As a result, Sterling movements will be dictated by the fast pace of Parliamentary developments and any breaking news will create volatility. MPs claiming a constitutional crisis will need to act quickly and their reaction could still support the Pound.

🇪🇺 EUR – The Eurozone was disregarded yesterday as events elsewhere overshadowed the single currency. Without any data to speak of, the Euro slipped slightly against a strong Dollar but did benefit from the Pound’s slide.

Today will see more focus on Europe as Eurozone Consumer and Industrial Confidence figures are released. These are expected to remain in negative territory although it would take significant divergence from the expected results to shake the market. Throughout the early morning, a handful of European countries will release various economic readings which will inform analysts on the strength of the Eurozone economy.

🇺🇸 USD –  Markets looked favourably upon the US Dollar yesterday as the safe haven currency benefitted from greater risks around the world. The US Dollar index edged higher despite an empty economic calendar as analysts overlooked the problems in America and the threat of recession.
Today sees a swathe of economic data reports from the US. Capturing the most attention will be Personal Consumption Expenditure figures at 13:30 to gauge the price changes of goods. The Fed will use these figures to inform them on the health of the economy and their next interest rate move. However, the impact of Sterling volatility may be the biggest factor for US Dollar movements today.

 

Summary:

GBP: Pound reacts negatively to plan to prorogue Parliament
EUR: Lack of data and headlines from the single currency
USD: Continues to benefit as a safe haven currency


 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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