It’s been a mixed session so far today, with Sterling and the Euro a little weaker versus the Dollar, the Swiss Franc and Kiwi Dollar broadly unchanged and the Australian Dollar a tad stronger. FX volatility may well pick up in the next 48 hours as markets face a flurry of tier-one macro data releases as well as the Fed’s policy meeting tomorrow.
The GBP/USD cross held up reasonably well yesterday afternoon around 1.285 after Parliament voted against an early general election in December, with Prime Minister Johnson well short of the two-thirds majority required. But the cross has dipped top 1.282 in the past couple of hours, flirting with a 10-session low. The leader of the ruling Conservative Party said his next step would be to introduce a bill calling for early elections, which would require only a simple majority. Johnson faces the same challenge as his predecessor, namely the lack of a parliamentary majority and inability to get a Brexit deal through parliament. He is hoping that an early election would see the Conservative Party gain a significant number of parliamentary seats (based on recent opinion polls) which would in turn increase the odds of parliament approving a Brexit deal before the new deadline of 31st January.
