British pound soars after Boris Johnson suffers Brexit blow
The pound soared against the dollar in early trading today after MPs left Boris Johnson’s Brexit strategy in tatters last night.
Sterling climbed 0.62 per cent against the USD dollar to hit $1.2163 after 21 Tory MPs rebelled against the Prime Minister in a vote that could force him to seek a Brexit extension.
Read more: The 21 Tory MPs Boris has sacked from the party after Brexit defeat
Markets welcomed the sign of certainty, sending GBP up 0.5 per cent against the euro to 1.1069.
“Sterling was thrown a lifeline by a parliament determined to avoid a no-deal Brexit,” Spreadex analyst Connor Campbell said.
Ex-Tory MP Phillip Lee’s defection to the Liberal Democrats obliterated Johnson’s parliamentary majority of one yesterday, which also boosted the pound.
“That was read as positive by the pound, for the simple fact that it makes it a bit harder for Johnson to (legally) force through his no-deal agenda,” Campbell added.
Johnson’s 328-301 defeat in the Commons means MPs will today vote on a draft bill that could force the Prime Minister to ask for a three-month extension to the Brexit deadline.
The Prime Minister’s hand will be forced if a deal with the EU is not agreed by 19 October.
“Somewhat more controversially, and hence a key focus for possible amendment, the legislation would also provide for possible further extensions of the Article 50 deadline beyond that date,” pointed out Daiwa Capital Markets Europe.
Could there be a general election?
Johnson is fighting back by trying to force a snap general election. But an election needs a two-thirds majority in parliament to carry.
Labour has said it would not support such a move unless legislation is passed to block no-deal Brexit.
Campbell said the threat of a general election has curbed sterling’s gains after it plunged to a 34-year low against the dollar for much of yesterday before recovering.
“However, the threat of no-deal remains high,” added Markets.com analyst Neil Wilson.
“An election has to happen sooner or later – surely it is better to happen now? Even if parliament gets its anti-no-deal legislation on the statute book before an election, a new parliament would be free to revoke.”
FTSE 100 climbs
A rise in sterling often hurts the FTSE 100’s exporters, but London’s index also rose today to 7,319 points – up 0.7 per cent.
Read more: PM loses key vote and threatens a General Election
The pound soared against the dollar in early trading today after MPs left Boris Johnson’s Brexit strategy in tatters last night.
Sterling climbed 0.62 per cent against the USD dollar to hit $1.2163 after 21 Tory MPs rebelled against the Prime Minister in a vote that could force him to seek a Brexit extension.
Markets welcomed the sign of certainty, sending GBP up 0.5 per cent against the euro to 1.1069.
“Sterling was thrown a lifeline by a parliament determined to avoid a no-deal Brexit,” Spreadex analyst Connor Campbell said.
Ex-Tory MP Phillip Lee’s defection to the Liberal Democrats obliterated Johnson’s parliamentary majority of one yesterday, which also boosted the pound.
“That was read as positive by the pound, for the simple fact that it makes it a bit harder for Johnson to (legally) force through his no-deal agenda,” Campbell added.
Johnson’s 328-301 defeat in the Commons means MPs will today vote on a draft bill that could force the Prime Minister to ask for a three-month extension to the Brexit deadline.
The Prime Minister’s hand will be forced if a deal with the EU is not agreed by 19 October.
“Somewhat more controversially, and hence a key focus for possible amendment, the legislation would also provide for possible further extensions of the Article 50 deadline beyond that date,” pointed out Daiwa Capital Markets Europe.
Johnson is fighting back by trying to force a snap general election. But an election needs a two-thirds majority in parliament to carry.
Labour has said it would not support such a move unless legislation is passed to block no-deal Brexit.
Campbell said the threat of a general election has curbed sterling’s gains after it plunged to a 34-year low against the dollar for much of yesterday before recovering.
“However, the threat of no-deal remains high,” added Markets.com analyst Neil Wilson.
“An election has to happen sooner or later – surely it is better to happen now? Even if parliament gets its anti-no-deal legislation on the statute book before an election, a new parliament would be free to revoke.”
FTSE 100 climbs
A rise in sterling often hurts the FTSE 100’s exporters, but London’s index also rose today to 7,319 points – up 0.7 per cent.
“This growth – which has also seen the DAX and CAC climb 1.1% and 1.2% respectively – stems from a couple of things,” Campbell said.
“Firstly, the confirmation of a new government in Italy; secondly, a better than forecast services PMI from China, a reading that has temporarily allayed some of investors’ trade war impact concerns.”
“This growth – which has also seen the DAX and CAC climb 1.1% and 1.2% respectively – stems from a couple of things,” Campbell said.
“Firstly, the confirmation of a new government in Italy; secondly, a better than forecast services PMI from China, a reading that has temporarily allayed some of investors’ trade war impact concerns.”