Stiff upper lip or fat lip?

Forex 5 minutes to read

Michael O’Neill

FX Trader, Loonieviews.net

Summary: It’s crunch time in the UK. Prime Minister Theresa May’s “stiff upper lip” could become a “fat lip” if she is unable to convince a majority of MPs to back her Brexit plan.

She is supposed to table it again this week in a third “meaningful vote”, but according to the Guardian, May would only do so if she believes she can win. The European Commission doesn’t think she will prevail. it issued a press release today which opened with “As it is increasingly likely that the United Kingdom will leave the European Union without a deal on 12 April, the European Commission has today completed its “no-deal” preparations. No pressure, Ms May, no pressure.

A week ago, the House of Commons Speaker John Bercow said he wouldn’t allow a third vote without substantial changes to the deal. Does the EU granting an extension to Article 50 from March 29 to May 22 count as a meaningful change? GBPUSD bounced in a 1.3165-1.3244 range since New York opened.

The US dollar has drifted lower in US trading albeit not very far from its opening levels. The Canadian dollar is the only currency to have lost ground, and that is due to bullish technicals and WTI oil prices dropping from $$59.02/barrel to $58.31/b.

Wall Street has an aversion to US Treasury yield curve inversion which sparked Friday’s sell-off on recession fears. The 3 month-10 year US Treasury yield curve isn’t inverted this morning, but traders are still spooked. The three major US equity indices followed Europe’s lead and are in the red. News that the Mueller investigation did not find any evidence that President Trump conspired with a foreign nation put the president in high spirits but didn’t do anything for equity markets.

Chart: GBPUSD 15 minutes. Source: Saxo Bank

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