Sterling falls from five-month high as Brexit final outcome remains unclear   

21 October 2019: Traders across the globe were eagerly anticipating the opening of forex markets this morning and Sterling, following Saturday’s House of Commons (non-) vote on the Brexit deal. The initial reaction to delaying the vote on the withdrawal agreement dragged the Pound slightly lower to around 1.29 at the time of writing. Sterling bulls have been disappointed due to Members of Parliament failing to pass Boris Johnson’s deal, however optimism remains high that the deal will pass this week. Another reason for the limited fall in the Pound is that the risk of a no-deal Brexit has reduced further after Johnson asked for an extension of the deadline. 

Trading the Pound is likely to become very volatile once again this week. The currency has already priced in much of the good news over the past seven trading days, surging almost 800 pips from October’s low. With only 10 days left to meet the October 31 deadline, Brussels needs to agree to an extension if the current deal doesn’t go through. While EU leaders want to avoid a disorderly Brexit, they prefer to get the deal done this week.

Boris Johnson may make another attempt today to hold the meaningful vote, but it’s up to House Speaker Bercow to allow it and this looks unlikely. Foreign Secretary Dominic Raab believes the government has the numbers to get the deal through. But UK politics, as we have seen recently, is very complicated and winning the vote is not guaranteed. Some Members of Parliament may try to amend the current bill by asking for a referendum to be attached to it. All in all, you probably need to be a political analyst to trade the Pound, as the nuances of the political process are played out

Reporting for EasyKobo on Monday , 21 October 2019 in Lagos, Nigeria

Source: FXTM Chief Market Strategist, Hussein Sayed 

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