Talking Points
- The UK Parliament went into recess today and does not return until February 20.
- That should give EURGBP traders a rest from the Brexit news flow that has buffeted the cross.
- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.
The UK Parliament went into recess today and does not return until February 20, potentially allowing traders in EURGBP to focus on the fundamental factors that could influence the cross, and technical factors too, rather than having to watch the newswires closely for the latest instalment of the Brexit saga.
Late on Wednesday, the Brexit Bill was approved by the House of Commons and the debate in the House of Lords will begin once the Members of Parliament return to work. Between now and then the Brexit newsflow is likely to dry up, although comments from politicians on both sides of the English Channel could still be important.
As DailyFX Analyst Nicholas Cawley explains, lower yields on German government debt could hit the Euro in the days ahead, with Greece’s enormous debt pile also a risk factor now Euro-Zone governments and the International Monetary Fund have fallen out again over how to handle the country’s bailout. That could move the focus fromthe GBP side of the equation to the EUR side, and the negative technical position of EURGBP is another factor to bear in mind.
The cross has just dropped below trendline support on the daily chart, potentially opening the way for a drop to the December lows just under 0.84.
Chart: EURGBP Daily Timeframe (August 15, 2016 to February 9, 2017)
However, the picture could change once the UK Parliamentary recess ends, and the following table from Reuters outlines the hurdles to jump before the Bill to trigger Article 50 of the Lisbon Treaty becomes law, allowing UK Prime Minister Theresa May to do so by her self-imposed deadline of end-March.
Timeline
Feb. 8 - The legislation completed its journey through the lower chamber of Parliament without amendment and was passed to the upper chamber, the House of Lords, for further scrutiny.
Feb. 9 to 20 - The legislative process is paused while Parliament is on holiday.
Feb. 20 - House of Lords is scheduled to begin its scrutiny process with a two-day debate.
Feb. 27 and Mar. 1 - Lords due to begin ‘Committee stage’ of legislation, during which amendments will be discussed and may be voted upon.
Mar. 7 - Lords debate final wording of Bill and may vote on further amendments.
- After this stage, if the Bill has been amended by the Lords, these amendments will be passed to the lower chamber for approval. The Bill can be passed back and forth until they agree.
- Once approved by both houses, it will go on to receive ‘Royal Assent’ and officially become law.
--- Written by Martin Essex, Analyst and Editor
To contact Martin, email him at martin.essex@ig.com
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