With the UK economy shrinking and pounding dropping, the market strategist sees the legislation blocking no-deal Brexit as their last hope to revive the sliding currency and economy in general.
The Labour Brexit spokesman Keir Starmer told Reuters that the legislation would be put out on Tuesday, with a “very simple” objective, to prevent UK prime minister Boris Johnson from divorcing the European Union without a proper economic deal in place.
Peter Chatwell, a strategist at Mizuho International Plc. told Bloomberg, “This is a make or breaks week for the opposition parties here. Parliamentary arithmetic and the speaker should allow them to make progress and I expect there to be a small rally in the pound.”
The UK lawmakers’ legation, stalling no-deal Brexit, seek the European Union’s extension of the exit deadline in course of no-deal by October 31. Lawmakers are hoping for an accord with the EU before the divorce to save the economy from being sucked into recession.
The Brexit uncertainty pushed the UK economy into negative territory as the country’s GDP growth rate drops. The reports of the second quarter of 2019 showed the contraction of the economy by 0.2%. It the first time in seven years the economic growth rate of the UK took a u-turn, shrinking the economy. Last time it happened in the first quarter of 2012.
The no-deal Brexit, gradually growing from an assumption into a reality, is increasing investors’ anxiety. It turned the markets volatile and even pulled pound down by 1.1% against the dollar. Analyst predicts a further drop in the pound, as its just the beginning of the dark times.
The slump in the figure, adds to the agony of already hurting the British economy. What made things worse was UK Prime Minister, Boris Johnson’s decision to suspend the UK Parliament from September 12 to October 14, in order to execute a smoother exit. With only limited time in hand, its ‘now or never’ situation for the opponents of no-deal withdrawal.
The strategist is optimistic that the market sentiment would improve if the legislation becomes successful in putting Johnson’s Brexit plans on hold.