Brexit Progress: Where Are We Right Now?

21st November 2019

Prime Minister Boris Johnson is intent on holding early elections in the United Kingdom to shore up support for impending Brexit legislation. He is looking forward, hoping to gain electoral advantage for the Tories, to try and sideline the bulwark of opposition being presented by the Labour Party and Jeremy Corbyn. That Prime Minister Johnson is late on his pledge to wrench the UK from the clutches of the EU is of little consequence; he fully intends to go through with his promise, byholding parliamentary elections to gain greater control for the Tories.

Labour has been placed under increasing pressure to agree to hold an election, failing which Brexit legislation would be withheld from further scrutiny House of Commons. Ministers, appointed by the Prime Minister, were determined to block legislation matters brought forth by the House of Commons. But now that date is nigh. This jockeying for position is geared towards strengthening the Prime Minister’s ruling hand which has taken a beating in recent years.

For now, the focus is clearly on a British general election. Prime Minister Johnson has been touting the line – Get Brexit Done, but not without a much-needed increase in Conservative seats. Unfortunately, some of the celebratory rhetoric was hamstrung by the resignation of a Cabinet minister, Alun Cairns in a scandalous rape trial.

Indeed, the Prime Minister has fired a volley of assaults at Labour leader Corbin, accusing the party of, ‘always running out of other people’s money’, and being a braggart about the Conservatives’ approach to spending. Election campaigning kicked off in earnest with the Liberal Democrats pledging £2.2 billion a year on mental health services, and the Green Party promising to invest £100 billion on climate change every year for 10 years. With respect to the Brexit situation, the UK economy has not been left unscathed.

Prime Minister Boris Johnson is intent on holding early elections in the United Kingdom to shore up support for impending Brexit legislation. He is looking forward, hoping to gain electoral advantage for the Tories, to try and sideline the bulwark of opposition being presented by the Labour Party and Jeremy Corbyn. That Prime Minister Johnson is late on his pledge to wrench the UK from the clutches of the EU is of little consequence; he fully intends to go through with his promise, byholding parliamentary elections to gain greater control for the Tories.

Labour has been placed under increasing pressure to agree to hold an election, failing which Brexit legislation would be withheld from further scrutiny House of Commons. Ministers, appointed by the Prime Minister, were determined to block legislation matters brought forth by the House of Commons. But now that date is nigh. This jockeying for position is geared towards strengthening the Prime Minister’s ruling hand which has taken a beating in recent years.

For now, the focus is clearly on a British general election. Prime Minister Johnson has been touting the line – Get Brexit Done, but not without a much-needed increase in Conservative seats. Unfortunately, some of the celebratory rhetoric was hamstrung by the resignation of a Cabinet minister, Alun Cairns in a scandalous rape trial.

Indeed, the Prime Minister has fired a volley of assaults at Labour leader Corbin, accusing the party of, ‘always running out of other people’s money’, and being a braggart about the Conservatives’ approach to spending. Election campaigning kicked off in earnest with the Liberal Democrats pledging £2.2 billion a year on mental health services, and the Green Party promising to invest £100 billion on climate change every year for 10 years. With respect to the Brexit situation, the UK economy has not been left unscathed.

The performance of the GBP USD pair has been bullish, approaching the 1.2918 resistance level, as expectations of a Tory victory on December 12 gain ground. If the British government shores up the necessary support to pass a Brexit deal by that stage, the GBP will rally. Just previously, the GBP/USD pair – the cable – dropped to the 1.2768 support level – the lowest in approximately one month. The GBP USD pair is currently priced well ahead of its 50-day MA (Moving Average) and its 200-day MA (Moving Average), hovering around the 1.295 level. The 200-Day MA is 1.271 and the 50-Day MA is 1.263. A short-term spike in trading is clearly evident and this has buoyed the GBP relative to the USD.

Gains for the GBP continued unabated, despite weaker than expected retail sales and inflation figures during October. It appears that political considerations alone are driving a bullish GBP, with expectations of Boris Johnson’s Tories winning big league in December. Not only did the Tories reject hundreds of potential candidates in favour of Johnson, they have rallied around the charismatic leader with all his pomp and ceremony. Trading activity is equally robust, with the GBP/USD pair showing a strong uptick in value in recent weeks. There are clear distinctions between the Britain that Boris Johnson envisionsand that of Jeremy Corbyn.

SMEs Remain Dour-Faced Amid Political Ballyhoo

Many SMEs across Britain are increasingly pessimistic about the future, given the uncertainties that lay ahead. Increasing political uncertainty and economic instability are being fuelled by divisive rhetoric between Labour and Conservatives. According to the Confederation of British Industries, the confidence gauge for SMEs dropped to -32% in the 3 months to the end of October 2019. That is -4% lower than in the three months ending in July. This fear gauge certainly doesn’t bode well for confidence in UK enterprise.

Output has been hammered, with decreased hiring and orders, leading to lacklustre economic performance. With the elections set for December 12, 2019, there is scant time to consider the deeper implications of a resounding Tory victory, or a surprise loss. Channel 4 News political analysts Prof John Curtis and Prof Matthew Goodwin made bold predictions about the UK general election in December, claiming that the Tories are 2:1 favourites. The GBP/USD pair certainly appreciates that sentiment. As electioneering continues in earnest, sterling is certainly enjoying a much-needed reprieve from the Brexit-related pressures, but will the rally last?

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