Market News & Analysis


Top Story

Pound Wobbles Ahead Of Brexit Vote

The pound is sliding towards $1.29 as investors look to the Parliamentary debate and vote on Boris Johnson’s Brexit bill. 

Bojo's Brexit deal will be put before the House of Commons for a vote. This is not the meaningful vote that John Bercow denied the Prime Minister yesterday, it is a vote on the Withdrawal Bill Act, essentially a vote on the implementation of Boris Johnson’s Bill. There will also be a critical procedural vote, which aims to approve all relevant legislation in three days.

What matters to the pound is not just whether Boris Johnson has sufficient numbers to get the vote Brexit bill through Parliament; number crunchers across the country seem to think that he does. However, can he get the necessary agreement to fast track it through? Here lays the uncertainty. 

The biggest weight on the pound has been fear of a no deal Brexit. With a no deal Brexit as good as off the table, the pound has consolidated above $1.29.  But how might the pound react to today’s vote?

Vote through bill / reject procedural bill
Bojo might have the numbers for the Brexit bill but should the procedural vote be rejected then the Brexit bill is expected to be scrutinized in much more detail and Brexit will almost certainly be delayed.
As we have seen from recent macroeconomic data and company result, months more of Brexit uncertainty is not favourable for the UK economy or the pound either. The BoE has hinted that it could be forced to cut interest rates should Brexit uncertainty continue. 
The prospect of more uncertainty could weigh on demand for pound. Even if the pound does rise on this outcome, any gains would be capped

Reject Brexit bill
This raises the chances of an election. Political uncertainty should an election be called to break the political deadlock could also hit the pound. That said, with a no deal off the table the pound is unlikely to plunge back towards no deal territory of $1.22 but $1.25 could come into view.

Both pass
This raises the possibility of the UK leaving the EU on 31st October with the deal in place. Under this scenario we could see the pound extend recent gains potentially targeting $1.34.


Disclaimer

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 cityindex.com.sg 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.