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Parliament's return sees pound plunge

GBP - British Pound

The pound suffered yesterday as parliament returned to debate Brexit after Tuesday's decision by the Supreme Court to annul its recent proroguing by PM Boris Johnson. Johnson as well as Attorney General, Geoffrey Cox came in for a barracking from opponents of leaving without a deal with some visibly seething with rage when questioning the governments illegal decision to end the current session of parliament thereby limiting the time available to debate the UK's exit from the EU.

Despite all the vitriol aimed at him, Johnson remained unrepentant and reiterated his mantra that the UK will be leaving the EU with or without a deal despite legislation against us dropping out out of the bloc without a withdrawal agreement passing into law earlier this month. Johnson continually goaded the opposition to call a vote of no confidence thereby likely triggering an election however Labour leader Jeremy Corbyn wasn't having any of it, knowing this could risk the UK slipping out of the bloc without a deal given it would involve parliament being suspended. Opponents of no deal are baying for an election however only once the delay to Brexit has been confirmed by the EU.

The resumption of hostilities in Westminster prompted the pound to take a bath, with GBP/USD falling from around 1.2480 as Europe came online to a low of around 1.2345 as New York clocked off for the day. Johnson didn't speak until around 6:30pm however by the time he gave his statement the damage had already been done to the quid. After the dust has settled it appears we are no closer to a deal/no deal/election/2nd referendum; sterling continues to remain a prisoner of Brexit politics. GBP/EUR sits at 1.1285.

Key Movers

Geopolitical fears mean there is limited risk appetite in financial markets at present. The recent bombing of Saudi oil processing plants, Brexit and the ongoing deadlock between US and China re: trade are all weighing on sentiment and the latest revelations re: Donald Trumps conversation with Ukrainian President, Volodomyr Zelensky have done little to lift the mood. Notes taken by White House staff of the conversation were released yesterday in an effort by Trump to diffuse accusations he had applied pressure on Zelensky to investigate the campaign of Democrat front runner, Joe Bidens 2020 election campaign. Although the notes don't show any explicit effort to bribe the Ukrainian PM by withholding hundreds of dollars of military aid, Democrats claim the tone is clear and the episode will hang over Trump for the foreseeable future.

A whistleblower complaint against Trump raised by an unnamed US security services employee over the call means acting director of US intelligence, Joseph Maguire will face questions from the House Intelligence Committee in Washington later on the matter with possibility the complainant themselves could face questioning over coming days.

All of the above means equity markets are mixed this morning USD/JPY is retracing back towards the 107.50 handle and gold is keeping its head above $1500 an Oz. EUR/USD is down to 109.50 as concerns over the health of the Eurozone economy continue to compound the aforementioned geopolitical woes.

Today sees the final reading of Q2 GDP from the States with no change from the prelim 2% predicted. We also have ECB Chief Mario Draghi and BoE Governor, Mark Carney talking at a conference in Frankfurt.

Expected Ranges

GBP/USD: 1.2280 - 1.2460 ▼

GBP/EUR: 1.12 - 1.1340 ▼

GBP/AUD: 1.8190 - 1.8350 ▼

GBP/NZD: 1.9505 - 1.9680 ▼

GBP/CAD: 1.6290 - 1.6450 ▼