Talking Points:
- It is unknown if Ms Von der Leyen has enough support to be elected as President of the European Commission on a vote to be held on Tuesday evening
- GBPUSD dips below 2019 lows and touches levels not seen since April 2017as Brexit uncertainty drags on
A possible successor to Jean-Claude Juncker as President of the European Commission will be facing a round of voting from European parliamentarians today after gaining backing from the 28 leaders. Ursula von der Leyen gave a last speech on Tuesday morning to MEPs to gain their backing in a vote expected to take place on Tuesday evening, where she will need the support from 374 parliamentarians to take up the post from November 1. She has the backing from most centre-right European parties but has faced harsh criticism from left-wing and green parties, casting some doubt on the likelihood of her being able to achieve the support needed. It is believed that an emergency summit will be held next week if Ms Von der Leyen is rejected.
It is unclear if she currently holds enough support to be elected as parliament’s Greens have announced they will not back her as she has failed to show enough ambition in tackling climate change, which could potentially cost her up to 74 votes. In a bid to try and convince MEPs to support her she has agreed to give the EU parliament more influence over the Commission’s regulatory setting by accepting to automatically discuss with her team any idea that gets an absolute majority of MEPs support. If she gets fewer than 400 votes, she might face a challenge to her ability to lead the European Commission which could see her being rejected as the next President. Because of her background as a Defence Minister, which is not a core of the Commission’s job, some believe she is not suited for the job.
She is believed to be a supporter of greater integration within the European Union and once said she would like the common block to become the United States of Europe, focusing on federal systems like the ones in place in Germany and Switzerland, which is likely to face resistance from strong-euro countries like Germany, Austria and the Netherlands, which could dampen her abilities to gain the support needed. Because she is seen to have a weak support system within the European Parliament we might see populist governments from Italy and Hungary back her as they she would be less likely to pursue legal measures against these nations if she owes her votes to them, which could help Italy in its excessive deficit case.
Views on Brexit
She recently said she was open to granting the UK a further extension to the Brexit deadline if “good reasons” are provided, which are expected to be either a general election or another referendum. But she has also mentioned that she will not be accepting any amendments to the current withdrawal agreement as she believes it is the “best and only possible deal for an orderly withdrawal”, which could put further downward pressure on GBP if she is elected on Tuesday evening as it increases the risks of a no deal Brexit.
GBP pairs have been trading around levels last seen in January 2019 when sterling was at year-lows as ongoing Brexit and trade war concerns keep investors concerned about the future of the British economy. GBPUSD dipped to 1.2407 on Tuesday morning as a mixed jobs data failed to pick up investor sentiment and has now breached its 2019 lows to a new low not seen since April 2017 when the pair was trading at 1.2402.
PRICE CHART: GBPUSD NEW LOW SINCE APRIL 2017 (DAILY CHART)
Recommended Reading
Eurozone Debt Crisis: How to Trade Future Disasters – Martin Essex, MSTA, Analyst and Editor
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--- Written by Daniela Sabin Hathorn, Junior Analyst
To contact Daniela, email her at Daniela.Sabin@ig.com
Follow Daniela on Twitter @HathornSabin
