Parliament Returns, Tempers Fray, More Uncertainty for the Pound

After cutting his trip to the US short Boris Johnson returned to the UK yesterday and arrived in parliament in no mood to entertain the notion of possibly resigning. The return of British Parliament has coincided with a new bout of selling in the Pound, with investors finding little by way of progress towards a denouement to the current Brexit deadlock.

If anything, risks of a decline in the currency on a 'no deal' Brexit remain as Prime Minister, Boris Johnson, told MPs on Wednesday night that he would not be asking for an extension of the deadline to Brexit if Parliament fails to pass a Brexit deal on October 19th. Asked if he would adhere to the terms of the Benn Act - which requires the Prime Minister to ask for an extension of the EU in the event of a Brexit deal failing - the Prime Minister replied "no." "

If he doesn't get a deal through this House, or a 'no deal' through this House, by 19th October, would he implore an extension from the EU to 31st January?" asked MP Ian Murray of Mr Johnson. Again, the Prime Minister said, “No”.

The Prime Minister was asked several times by MPs whether he would comply by the legal requirement to secure another extension, and on no occasion did he indicate he would be prepared to break the law. It has been suggested he has a strategy that has not yet been revealed.

The Prime Minister again and again repeated the message that the UK will leave on 31st October with or without a deal. There is no legislation obliging the Government to ask for an extension unless there is a deal with the EU that can be accepted by the Parliament on the 19th October," says Richard Falkenhäll, Senior Currency Strategist with SEB. For foreign exchange markets, this all amounts to increasing uncertainty, and it is little wonder Sterling's recent run higher might have come to an end.

The GBP EUR exchange rate is quoted at 1.1285 after experiencing a 0.45% fall the day prior, the September high is up at 1.1380.

The GBP USD exchange rate is trading at 1.2368, following a sizeable 1.0% fall the day prior, the September high is at 1.2582.

Other key rates this morning:

EURUSD – 1.0944

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