Amplify Trading Global Markets Review - 23rd October 2019

Amplify Trading Global Markets Review - 23rd October 2019

Today's Highlights

  • UK Government suspends bill after Program Motion defeat last night

  • UK PM Johnson pushes for General Election awaiting EU extension decision

  • Boeing profits and revenues slips in Q3 amid 737 Max crisis

  • Trump says ceasefire in Syria agreed with Turkey

Macro Review

Relatively choppy day in markets as Brexit enters a limbo phase and mixed US earnings.Last night was a historical day in the Commons and surely a happy day for Boris after securing a cross-party majority over a Brexit deal for the first time since the start of the saga.However, the big blow to Boris' plan arrived after MPs voted down the timeline to the approval process of the Withdrawal Bill which aimed to convert the Bill into law by October 31st. As highly anticipated, MPs ask for further scrutiny of the current deal, which was published only last Monday. Therefore, the Government will not be able to pursue its plan to get "Brexit done" by October 31st and forced to ask for an extension to the EU. As previously stated by Downing Street if MPs were not to respect the Brexit deadline and the EU was to grant an extension then the Government would table a General Election motion.Thus, the ball passes to the EU which according to sources should pronounce their decision on Friday. The possible offers would be:

1) Short technical extension: Boris preferred option. Might give him time to approve the deal or just call for a general election

2) January 2020 extension

3) Long extension until June 2020

4) "Flextension" until January 2020 with option for the UK to make Brexit happen by:     

4a. November 15th 2019     

4b. December 1st 2019     

4c. December 15th 2019     

4d. January 15th 2020

The last one in particular seems the option that EU Tusk had in mind and would like the rest of 27 countries to agree upon. All the other scenarios point out to an extension and eventually a resolution with a General Election or MPs being able to scrutinise and in the end vote in favour of the deal - already accepted "in principle" at the Bill "second reading". As a result GBPUSD recent rally is poised to remain sustained in the medium term, with short-term potential headline risk. There is still a risk of no extension at all, especially given France opposition to it and pledge to veto the vote. However, this would significantly increase the risk of no-deal Brexit and Tories using it as leverage to blame the EU. However, this remains a tail risk for the moment.

EU Close

If you missed the morning briefing from the desk click HERE

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