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Snap election uncertainty causes pound to fall

25th October 2019 Market Update

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🇬🇧 GBP –  The pound dropped yesterday afternoon after PM Boris Johnson stated he will give MPs more time to debate the Brexit deal but only if they agree to 12th December general election. If Labour agrees to the election, then the government will attempt to get is deal through before parliament is dissolved on the 6th November.
Labour, who will be key a player in approving an election, have called for “explicit commitment” on no deal – which may well include legislation in parliament – in order to back an election. However, Sajid Javid has already said this morning that the government cannot take a no deal Brexit off the table.
Sterling dropped to a week low on the back of the news ahead of a scheduled announcement today from the EU to decide on how long to extend Article 50 for. However, in early reports this morning, there are suggestions that following the PM’s call for an election the EU may wait until Monday to announce its decision on how long Brexit should be extended for. Sterling is likely to remain under pressure as election uncertainty begins to mount.

🇪🇺 EUR – It was Mario Draghi’s last monetary policy meeting yesterday and in his swan song he has left with a very gloomy economic warning on the eurozone causing the single-bloc currency to weaken. Data from Germany this morning has revealed that consumer confidence is now at its lowest since 2016. According to the GfK institute, the global economic downturn, trade conflicts and Brexit has consumers in Germany more pessimistic about the economic outlook.
IFO business confidence data is out today to give a reflection on how corporate Germany is deeming the economic outlook.

🇺🇸 USD –  Manufacturing PMI figures improved in October surpassing expectations causing the US dollar to gain across the board.
No major news due today.



GBP: Labour unwilling to back election until no deal Brexit ruled out
EUR: Draghi leaves ECB with gloomy outlook
USD: Manufacturing beats expectations


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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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