Brexit Briefing: GBP Price Eases, October 31 Deadline to be Missed
GBP price, Brexit news and analysis:
- The GBP/USD price is easing back after the UK House of Commons gave its preliminary approval for the proposed Brexit deal between the EU and the UK but rejected UK Prime Minister Boris Johnson’s truncated timetable for the necessary Brexit legislation to be passed.
- Lawmakers decided they needed more time to debate it and propose amendments to it.
- All now depends on whether the EU will grant an extension to Johnson’s October 31 deadline to leave the bloc and, if so, for how long.
- A UK General Election is increasingly likely.
GBP traders focus on length of Brexit extension granted by EU
The UK House of Commons has approved in principle the proposed Brexit deal reached by UK Prime Minister Boris Johnson and the EU but rejected his truncated timetable for the necessary legislation, the EU Withdrawal Agreement Bill, to be passed. He had hoped it would pass quickly through the UK Parliament but that was voted down as Members of Parliament decided they needed more time to debate it and table any amendments.
The EU will now need to grant an extension to the October 31deadline for the UK to leave the EU and it is, as yet, unclear how long the extension will be. A three-month extension to January 31 is the most likely outcome but it could be longer, shorter or flexible – a so-called Flextension.
Donald Tusk, the President of the European Council, has said he is favor of three months, as requested by the UK Parliament, and is due to consult EU member states over the coming days. All this makes a no-deal Brexit less likely, and should therefore benefit GBP, although it is falling Wednesday for the second successive day.
GBPUSD Price Chart, 30-Minute Timeframe (October 21-23, 2019)
Chart by IG (You can click on it for a larger image)
The key for GBP/USD remains whether it can breach resistance at the psychologically important 1.30 level. If not, an extension of this week’s losses is likely.
Further ahead, a UK General Election now seems likely before the end of the year, allowing Johnson to argue that the deadline was missed because of Parliament, the courts and the “establishment”. Whether he wins it will likely depend on whether he can persuade voters he was not to blame, and thereby fend off Nigel Farage’s hardline Brexit Party.
Resources to help you trade the forex markets:
Whether you are a new or an experienced trader, at DailyFX we have many resources to help you:
- Analytical and educational webinars hosted several times per day,
- Trading guides to help you improve your trading performance,
- A guide specifically for those who are new to forex,
- And you can learn how to trade like an expert by reading our guide to the Traits of Successful Traders.
--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.