Relief at Supreme Court Decision
GBP has been rallying again this week as forex traders react to news of Boris Johnson’s Supreme Court ruling.
The judges of the highest court in the UK ruled against Johnson on the back of last week’s three-day hearing. The court decided that Johnson had acted illegally.
The ground-breaking unanimous verdict has boosted expectations that the UK will be able to avoid a no-deal Brexit.
Betfair odds for a no-deal Brexit have slumped to around just 20% following the ruling. Meanwhile, the odds of the UK leaving the EU at all on October 31st are now at 27%.
Opposition Call on Johnson to Resign
With the Supreme Court president ruling that the proroguing of parliament was a matter for the courts and not merely political, Johnson’s position as PM has been challenged.
The immediate response has seen many high-level figures calling for Johnson to resign. However, it seems that despite the political anger caused by Johnsons’s action, the opposition party will not be pursuing a vote of no confidence.
There had been speculation Jeremy Corbyn would try to topple Johnson if he lost the Supreme Court case. However, Corbyn immediately addressed the issue, saying that he will not be tabling a vote of no confidence. However, he did call on the Prime Minister to step down.
Corbyn Pushes for Elections
Corbyn told supporters at the Labour conference:
“Boris Johnson has been found to have misled the country. This unelected prime minister should now resign.”
Corbyn went on to voice his support for an election, once a Brexit extension has been secured, stating:
“He thought he could do whatever he liked just as he always does. He thinks he’s above us all. He is part of an elite that disdains democracy. He is not fit to be prime minister… This crisis can only be settled with a general election. That election needs to take place as soon as this government’s threat of a disastrous no-deal is taken off the table. That condition is what MPs passed into law before Boris Johnson illegally closed down parliament.”
The Return of Parliament
Parliament has reconvened today following the ruling to annull the proroguing, meaning parliament is still in session. Parliament now has until October 19th to approve a Brexit deal or give its support to a no-deal Brexit. If it fails to do so, Johnson will have to apply for an extension to Article 50.
Is a Brexit Deal Possible?
It seems highly unlikely that parliament will be able to approve the current deal being offered by the EU.
Irish PM Leo Varadkar spoke this week of the divisions remaining over Brexit.
Writing on Twitter, the Irish leader said:
Labour Push for Second Referendum
For now, it seems that the focus will be on establishing an extension to Brexit before pursuing general elections.
The Labour party has vowed to offer the UK electorate a second referendum should it succeed in the elections. A Conservative win at this stage would likely see the UK leave the EU without a deal in line with Johnson’s earlier guidance.
Trump Backs Johnson
Indeed, it seems that any speculation that Johnson would resign in the wake of the UK court’s decision is unfounded. Commenting on the situation during a joint press conference yesterday, Trump said in response to questions regarding Johnson’s resignation:
“I know him well, he’s not going anywhere.”
The reaction to the news of yesterday’s Supreme Court ruling has been mixed. Following an initial pop higher in GBP, we have seen price softening a little today. The overriding theme of these Brexit negotiations continues to be uncertainty which is creating a difficult landscape for GBP traders.
For now, focus remains on a further grind higher as the odds of a no-deal Brexit continue to weaken. While GBPUSD holds above 1.2382, bulls will be focusing on a break of the bear channel top next. 1.2690 is the next key resistance level to watch.