24th September 2019
What does the Supreme Court mean for GBP?
Anything that boosts the power of members of Parliament will be taken well by the market but it’s hard to say that this is a big moment for the market as the end outcomes and probabilities of Brexit remain the same…for now.
Rough rule of thumb: Anything that works against Boris but works in favour for rebel MPs, decreases the market odds of a hard Brexit. It’s why GBP edges higher as a result. Updated charts below.
- Current long GBP position: Short EUR/GBP, but it has already reached my initial target of 0.8850, so adding here is not the best course of action. It is likely the market will enter another upswing in the “positive outcome pricing” of the Brexit Hype cycle…but a “Eureka moment” is nowhere near yet and become disappointed at a lack of progress. Cautiously long…
It’s what happens next that matters more:
- Parliament is reconvening but what will they do? Bercow has already announced a recall at 11:30am tomorrow, the Conservatives conference this weekend make it difficult timing.
- What do the PM and MPs plan to do in response?
- a) Government Prorogue again? (Judges made clear proroguing for 4-6 days for a Queen’s speech is in order, but this would be poor optics).
- b) Does Boris step down? (unlikely, He will speak soon at an event for US businessmen to give his response and again at the UN General Assembly this evening.
- c) Vote of no confidence by MPs? (possible, but deciding on an interim leader very hard). Therefore risks an election which rebel MPs are trying to avoid.
- d) Rebels Legislate for other non-election options? Via indicative votes or other means? (this requires some creatives/change of opinions that we have yet to see).
- How does the public respond? Like everything else, probably along Brexit lines of support and the debate goes on and on. But the Conservatives conference could turn pretty ugly this weekend.