GBP/USD remains within its 1.1950-1.2600 September range, but the downside looks vulnerable unless there is a surprise Brexit breakthrough, or a rout in the USD.
Since becoming PM, Johnson has been accused of talking to his Brexiteer electorate, rather than negotiating with the EU nL5N26T1EZ. His repetition of key phrases such as the 'surrender bill', used to describe the law making a hard Brexit illegal on Oct 31, is a case in point - this strategy was successful in the 2016 Brexit referendum.
Johnson insists the UK will exit the EU without a deal on Oct 31, but he committed in court to respect the law.
Is his stance just bluster aimed at the voters in a likely upcoming UK election? Or have his advisers devised a way to circumvent the courts? It is impossible to tell, but if it is the latter, there would be uproar in parliament, where he has no majority. Thus an election in Q4 looks the most likely outcome. The FT cites the Click here as saying it will be the hardest election to call in the last 10 years.The continued uncertainty should drive sterling lower.
A sustained break of 1.2197, 61.8% of the September bounce, would be a bearish signal.
gbp oct 9 Click here