Market News & Analysis

Top Story

More Brexit Uncertainty Post Super Saturday Could Dampen Demand For Sterling

What happened?
After much hype, Parliament never took the meaningful vote that they were gearing up to take. The House of Commons voted 322 vs 306 in favour of a key amendment by Oliver Letwin. This amendment means that any support that MP’S give to the new Brexit deal is withheld until legislation to implement the deal has been passed. In short, the amendment closes a loophole in the Benn Act, that could still have allowed a no deal Brexit. 

Under the Benn Act Boris Johnson is now legally obliged to write a letter to the EU before 11pm requesting an extension to Brexit. 
Shortly after the vote Boris Johnson was adamant that he would not negotiate an extension to Brexit with the EU. It is still unclear if he will obey the law.

What does this mean for the pound?
The FX markets are closed on Saturday so the first sight of any reaction in the pound, the principal barometer to ups and downs of Brexit, will be as the markets the open on Sunday evening.

Primarily pound traders are focused on the chances of avoiding a no deal Brexit and levels of uncertainty. With today’s vote once again increasing levels of uncertainty, the pound's rally to a 5-month high in the previous week could start to unwind in early trade at the start of the week. The pound has made it clear that it is not in favour of continued uncertainty. The pound’s 6% rally so far this month is under threat.

The most important factor for sterling is what could happen next? Whilst on the one hand, today’s vote makes a no deal Brexit less likely, that is only dependent on the EU agreeing to extend article 50. 

A refusal by the EU to extend article 50 raises the chances of a no deal Brexit substantially and could hit the pound hard. 

Boris Charges Ahead
Boris has suggested that he will attempt to get the necessary legislation through this week regardless. This is politically a very ambitious plan. Depending on the House speaker, another vote could take place on Monday or Tuesday. Alternatively, this could also turn out to be a very drawn out process.

Bearish levels to watch:
Support can be seen around $1.26 and $1.24. Historically the pound has traded around $1.20 - $1.22 amid increased risk of a no deal Brexit. Further no deal fears could send the pound towards $1.1841 the 2016 lows.

Bullish levels to watch:
On the upside, resistance can be seen at $1.3150, $1.3185 and then next big level of resistance comes towards $1.34 at $1.3381

Rather than provide more clarity, today’s vote has muddied the waters further. There could be heightened volatility on the open for the pound and the increased level of uncertainty could dampen demand for sterling after a phenomenal previous week. 

Short term levels to watch at the start of the week include $1.3050, $1.2990, $1.2780 and $1.27.


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.