Brexit, Prorogation and the Bank of England
- UK PM Boris Johnson meets European Commission President Juncker
- UK Supreme Court to decide on Prorogation challenge.
- Bank of England monetary policy announcement.
Q3 2019 GBP Forecast and Top Trading Opportunities
Sterling (GBP) Facing a Potentially Volatile Week
A busy week for Sterling traders with Brexit news and the latest Bank of England policy decision the main drivers of price action. Add in the latest inflation data and Sterling is likely to be volatile all week.
UK PM Boris Johnson is in Luxembourg today (Monday) to meet with European Commission President Jean-Claude Juncker for Brexit talks with Brexit negotiator Michel Barnier also in attendance. According to various media outlets, PM Johnson will reiterate that the UK will leave the EU on October 31 with or without a deal, despite the UK Parliament recently passing a law making it illegal to leave without a deal. Other media outlets are saying that a deal is inching closer between the two sides, with progress being made on the Irish border, although this rhetoric has been repeated over the last few weeks with no concrete plans yet provided by the UK.
On Tuesday the UK Supreme Court will sit to judge the recent decision by the Scottish Court of Session who ruled that the recent prorogation of Parliament was illegal. While the Scottish civil court ruled that prorogation was null and void, they did not enforce that judgement. The UK Supreme Court is expected to give its verdict on whether prorogation was lawful or not by the end of this week.
How Boris Johnson Can Suspend Parliament by Using the Queen’s Speech - Prorogation
On Thursday, the Bank of England are expected to leave UK interest rates unchanged at 0.75% against a backdrop of firming UK economic data. Recent monthly GDP data suggest that the UK economy will not contract in Q3, while strong wages and jobs data would normally point to higher interest rates in the coming months. Ongoing Brexit talks will stay the BoE’s hand on Thursday and BoE governor Mark Carney is expected to highlight this once again.
For all economic and data releases see the DailyFX Economic Calendar
GBPUSD has pared last week’s gains and currently trades around 1.2435 after having broken above 1.2500 on Friday last week for the first time since July 25. The recent series of higher lows should provide some support for GBPUSD this week, while a recent cluster of highs and lows around the 1.2382 area should also prove supportive in the short-term.
GBPUSD Daily Price Chart (February - September 16, 2019)
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IG Client Sentiment data show that of retail traders are 60.4% net-long of GBPUSD, a bearish contrarian indicator. However, recent daily and weekly positional changes suggest that GBPUSD may soon reverse higher despite traders remaining net-long.
Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.
What is your view on Sterling and Brexit? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.com or via Twitter @nickcawley1.
