Double defeat for Boris Johnson
UK Prime Minister Boris Johnson has suffered a double defeat after lawmakers passed a bill aimed at preventing a no-deal Brexit and his bid for a general election was shot down, causing volatility ahead for sterling.
The bill meant Johnson would have to seek an extension to Article 50 if no deal had been agreed by the 31 October deadline and passed through the House of Commons in just one day with 327 votes in favour.
The motion, which will now go to the House of Lords, was faster than usual as Parliament was due to be suspended from next week.
Johnson also sought a general election to be held in mid-October but this was rejected by MPs with only 298 voting for the motion, 136 short of the required number.
Labour leader Jeremy Corbyn said he would only support a general election if the deal was passed removing the risk of a no-deal Brexit.
Nigel Green, chief executive of deVere Group, said: “Johnson’s highly controversial ‘do or die’ approach to Brexit was thrown out yet again by MPs, meaning the chance of a no-deal Brexit is further slashed.”
This would have mixed results for sterling with a positive bounce in the short term but a negative one should Labour win the election.
"The squeeze on Boris Johnson’s plans will have a positive effect on the pound in the short term – we can expect it to trade considerably higher in the coming sessions as the potential for the PM losing his threat of no-deal increases," Green said.
“However, this might also be put in context. The rebound will be tempered by an imminent election.
“And should a Corbyn-led Labour party win that election, there will be even more bad news for the pound. His anti-business rhetoric and high tax and low-profit policies would lead to a significant sterling sell-off.”
AUTHOR
Laura Dew
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