Consequences of no-deal on GBP pairs

Published date: 09/09/2019
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The showdown of the UK Parliament this week will be a key event impacting GBP pairs. According to several sources, the Queen’s petition will be applicable from September 12th onwards. If the Parliament gets suspended, investors will have a clear idea of whether the no-deal Brexit is a base case scenario or not.  

Economists are predicting harmful consequences if the government keeps its plan of leaving the EU without a deal, as the decision will affect businesses and commerce (due to possible delays at the borders). 

Political uncertainty is stronger than ever and the panorama doesn't seem to change as the Conservative party remains in power until 2022. Here are the key events from the Brexit timeline you need to be aware of:

  • - September 12: Suspension of the Parliament.
  • - September 14-17: Liberal Democrats Party Conference
  • - September 21-25: Labour Party Conference
  • - September 27: Conservative Party Conference
  • - October 14: Parliament re-opened + Queen's speech + Parliament restart to debate Brexit
  • - October 17-18: European Council Summit
  • - October 31: Brexit Deadline. 

 

If Brexit gets delayed, businesses will be negatively impacted once again, with the UK's Gross Domestic Product expected to fall between 2-3% in 2020. A fall of that magnitude will pressure the BoE to cut rates near zero, which will be in alignment with the ECB and the Fed by that time. 

The probabilities are now favouring a delay and a general election during the last trimester of the year. The recommendation is to short the Sterling during the bull runs, as a hard Brexit is not going to support the strengthening of the currency at all. GBP/USD remains inside a descending channel. 

Johnson will be fighting to succeed in his initial plans, and that will only going to add more fire into the whole situation, with the possibility of Corbyn leading the Labour Government if the General Election takes place. 

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