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GBP Plummets Amidst Efforts To Block No Deal

Jul 9 2019, 03:40 PM (BDT) | Orbex.com

Brexit is once again back in the spotlight. Former attorney general Dominic Grieve has outlined his plan to prevent Boris Johnson from forcing a “no deal” Brexit by shutting down parliament.

Grieve has tabled an amendment to the Northern Ireland Bill which would require MPs to sit in parliament on September 4th, October 9th and then every two weeks until December 18th.  

Second Attempt 

Grieve made a previous attempt last week at foiling plans to force a no deal Brexit. However, it was undone when the speaker of the House of Commons John Bercow didn’t select an amendment put forward by Labour’s ex-Foreign Secretary Dame Margaret Beckett. This would have blocked capital supply to government departments in the event of a no deal Brexit.

BoJo Vows To Leave EU on October 31st

Boris Johnson, the favorite in the current Conservative leadership contest, has publicly vowed to take the UK out of the EU on the current October 31st deadline “do or die”.

Although Johnson has made it clear that he isn’t “attracted” to the idea of proroguing parliament to make certain that the UK leaves on time, he has yet to rule it out

Grieve Stands Up For Democracy

However, if passed, Grieve’s amendment would effectively block Johnson from making such a move.

This is because it would ensure that parliament continues to meet in the run-up to the Brexit deadline.Speaking with UK Radio 4, Grieve said:

“If you decide that Parliament is an inconvenience, when in fact it is the place where democratic legitimacy lies in our constitution and therefore it’s acceptable to get rid of it for a period because it might otherwise prevent you from doing something which Parliament would prevent, then it’s the end of democracy.”

Grieve Putting Focus on Northern Ireland

The devolved Northern Ireland government at Stormont is currently suspended, and the amendment “would require fortnightly reports to be after the conference recess until an Executive was formed, or until the December recess”.

The amendment is based on a specific section of the2004 Civil Contingencies Act. This commands the Commons and Lords to sit at times of national emergency. The Times newspaper in the UK has reported that a group of roughly 30 MPs is currently planning to block Johnson’s plans for a no-deal Brexit.

BOE Warns of Growing No Deal Brexit Risks

At its last meeting, the Bank of England noted that the risks of a no deal Brexit have increased substantially. It indicated that, in such a case, the bank would likely need to cut rates in a bid to backstop the economy.

GBP has been sharply lower since the last BOE meeting. And as the October 31st deadline looms and uncertainty builds, further downside is likely.

Technical Perspective

GBPUSD

After failing at 1.2750, GBPUSD has turned sharply lower, breaking down through the 1.2531 support. It is currently challenging the 1.2481 support. Below here, the 1.2438 2018 low is the next key level. A break of this would be a powerfully bearish technical development for GBPUSD. It’s worth noting that we are seeing strong bullish divergence on the RSI indicator, warning of the potential for a squeeze higher. However, bulls will need to quickly see a break back above the 1.2750 level to negate the near term bearish bias.

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