The UK’s Prime Minister faces a fresh electoral threat from 20 rebel Tory MPs who have joined Jeremy Corbyn’s efforts to rule out a no-deal Brexit.
The motion to block a no-deal Brexit will most likely be tabled in Parliament as MPs fear they will lose control over Brexit. Risk heightened after Boris Johnson revealed his plans to shut down Parliament last week, as well as vocalized his opposition to requesting another Brexit delay from the EU.
BoJo Threatens With Snap Election
Today, Britain’s Parliament returns from recess. MPs will be voting on taking control over Brexit, as well as other bills. Boris made it clear in his speech outside No.10 yesterday, that if Parliament raised the steaks, he would call on a general election on October 14th.
Hammond-led rebels were told they would be sacked should they proceed with backing the new no-deal bill. But, given the choice all MPs have and the time left until the Queen’s Speech, Parliament could indeed push through with any alternative legislation to avoid a hard Brexit.
The votes on Tuesday and Wednesday are critical for the UK’s political and economic future.
UK Economic Data Increase Fears of Recession
Political uncertainty has led to the steepest decline in the UK’s purchasing manager’s index (PMI), Monday’s figures indicated. The economy is slowing down, not only because of UK politics but also because of global geopolitical tensions. As such, factory activity in the UK fell to a level not seen since 2012.
As Britain approaches the critical October 31st deadline, it’s only natural that new factory orders are deteriorating. This is resulting in increasing fears of a recession and businesses entering a vicious cycle from which they can’t get out. The set of data showed that activity contracted for the fourth consecutive month.
The UK’s Markit/CIPS Construction PMI is coming out later today. Expectations remain way below the 50 recessionary mark.
Cable Breaks Below January 2017 Level
The outlook for GBPUSD looks bearish. And yesterday’s decline is continuing into today’s session. This seems to suggest that cable has another leg to the downside – most likely a sharp one to take breakeven stops out.
The extension to wave 5 (v) completion shows that the currency pair could get as low as near $1.18. But this assumes that prices remain within the multimonth descending channel.