The pound fell today as traders geared up for a clash between the government and rebels opposing Boris Johnson’s controversial Brexit plans.
Opposition lawmakers are expected to propose legislation
According to a source linked to the Conservative party, Johnson is making political threats to anyone within his party who votes against the government.
In early trading in London today, the pound fell more than 0.5%, hitting $1.2094 and a two-week low as Brexit tensions continue to weigh on the currency. Meanwhile, against the euro, it fell 0.4%.
This fall comes just as the pound had managed to strengthen around the $1.22 mark after it fell to $1.20 last month, following Johnson’s appointment to PM. And with Brexit plans being so up in the air, the cable remains vulnerable to political turmoil and economic slowdown.
Furthermore, PMI data for Britain’s manufacturing sector came in at 47.4, against a forecast of 48.4, according to Reuters poll of economists, increasing concerns about the UK economy.
Indeed, traders are expecting even more volatility in the pound, with estimates focusing on the volatility of 2019 highs.
Thousands of people across the UK joined forces over the weekend to protest against the Queen approving the decision to suspend parliament. Johnson’s government called for this decision in an attempt to squeeze the remaining time for lawmakers to stop a “no-deal Brexit”.
According to a note by MUFG analysts:
The pound will initially attempt to add to its recent gains if opposition MPs are successful in passing legislation in the week ahead. However, those gains could prove short-lived as it remains unclear how the government will respond to the request from parliament.
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