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Closer to Brexit Pandora's Box

Sep 30 2019, 10:51 PM (+06) |

In the latest developments from the United States and the impeachment scandal that rocked the market last week, President Donald Trump has been busy venting on twitter. He is proclaiming that Democrats are ‘trying to stop him’ because he is fighting for the American people. He is demanding to meet the ‘whistleblower’ as well as ‘the person who illegally gave this information, which was largely incorrect, to the “Whistleblower.”’. 

Mr. Trump also targeted US House Intelligence Committee Chairman Adam Schiff, stating that he wanted ‘Schiff questioned at the highest level for Fraud & Treason’ for misinterpreting his words. 

Adam Schiff is planning to subpoena President Trump's personal attorney Rudy Giuliani for documents tied to the Ukraine scandal, while Rudy Giuliani replied that he ‘wouldn't cooperate with Adam Schiff,’ he also added that he thinks Adam Schiff should be removed Chairman of the House Intelligence Committee. Both Giuliani and Schiff aired on TV on Sunday. 

The ‘Whistleblower’ will testify against President Trump as soon as his or her attorneys get accompanying clearance and the logistics are planned out to protect the informer’s identity. 

One of Trump’s tweets that compares the impeachment to the Civil War did not sit well even with his fellow Republicans such as Rep. Adam Kinzinger, a decorated Air Force veteran who served as a pilot in Iraq and Afghanistan said the remark ‘is beyond repugnant.’

The United States Dollar is not so fazed by the impeachment inquiry and stocks also stabilized after the initial market scare following the impeachment announcement. 

On a more noteworthy front, investor's nerves are cooling with renewed trade optimism. 

The USMCA (U.S-Mexico-Canada trade agreement) is in final works and the United States also negotiated a limited trade deal with Japan that will increase American exports of beef, pork and cheese to Japan. 

High-level talks are to resume with China on the 7th of October following China’s epic celebration of the 70th anniversary of the founding of the People's Republic of China.  

The United Kingdom 

Meanwhile, on the other side of the Atlantic, Brexit titans continue to clash. PM Boris Johnson is in Manchester for his first Conservative annual gathering as prime minister. The visit, for PM Johnson, has unfortunately been dampened by 20-year-old allegations of sexual impropriety, which he denies, calling the allegation a ‘distraction’.  

The UK is to present a new solution for the Irish border by the end of this week. On Monday, finance minister Sajid Javid said ‘Hopefully we leave with a deal’ adding ‘If we cannot strike a deal, I think it is important to leave in any case and leave with no deal. It is not perfect but it is appropriate that we leave on the 31st.’

His next comment is what has the market and investors deeply mulling about –‘The legislation that parliament has passed of course has made things more difficult, but we are clear our own policy is completely unchanged, we will be leaving on 31st, Javid said, referring to the law which demands the prime minister to delay Brexit in case a deal is not reached. 

Javid and PM Johnsons ministers refused to comment as to what trick is up their sleeve. October 31st may well be a fitting date to open Brexit Pandora’s Box. 

October is going to be a key market moving month for Brexit sensitive currency pairs and investors will be monitoring all new developments. 

GBP pressure was interrupted by worse than expected U.S. Chicago PMI which was released at 47.1, below the forecasted 50.2. 

Further movement down for GBPUSD looks to be more favorable at this time with target areas at 50% Fibo 1.22702, followed by 61.8% Fibo around 1.21966. 

Tomorrow is October 1st and the economic calendar will show us UK Manufacturing at 11:30 GMT followed by US Manufacturing figures at 16:45 GMT+3.

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