Brexit and COVID-19 – The Pound Sits in the Hands of Parliament…It’s all eyes on the UK’s Parliament and the Pound today. A government statement on COVID-19 proceeds the MP debate on the Internal Market Bill…
The Internal Market Bill – What’s next?
At the start of the week, the Internal Market Bill had yet to progress to the House of Lords.
While the bill sat in limbo, however, the chatter continued as members of Parliament continued to air their views.
This time around, it was ex-Prime Minister Theresa May who spoke out from the political wilderness.
Having failed to move Brexit along, some appear to have been surprised by the willingness to air a view that was likely to be chastised by many.
Theresa May spoke out at the start of the week saying that she could not support the proposed bill.
The ex-Prime Minister certainly didn’t hold back, calling Johnson’s move both reckless and irresponsible.
Ironically, it reflected Theresa May’s stance on Brexit, a pro-European at heart.
Later this morning
The House of Commons is scheduled to debate Boris Johnson’s Internal Market Bill.
With Johnson’s commanding majority, there is unlikely to be too much concern over Theresa May’s outburst and lack of support.
Expectations are for the bill to be revised to ensure the inclusion of the parliamentary vote before any breach of the Withdrawal Agreement is permitted. The Parliamentary Lock looks to have appeased a number of pro-Brexiteers that had been against the original bill.
As for the House of Lords, the vote on the Internal Market Bill is not due to take place until November.
Between now and November, there will be last gasp attempts by both the EU and Britain to come to a Brexit agreement.
While the bill may not have passed through the House of Lords, Johnson will no doubt use it as part of the negotiations.
Last week, we talked of Johnson taking a leaf out of the U.S President’s book. Unfortunately, for Johnson, however, some MPs are devaluing the bargaining chip by stating their lack of support for the bill.
How the EU responds remains to be seen but we can expect plenty of chatter once Parliament makes its amendments.
The Pound, COVID-19, and Brexit
At the time of writing, the Pound was up by just 0.04% to $1.2807 for the day.
While Brexit has been a key driver for the Pound of late, sinking it back to sub-$1.30 levels, there’s also COVID-19 to consider.
The markets will be looking ahead to a government statement ahead of the Internal Market Bill debate.
News of a spike in new COVID-19 cases doesn’t bode well for the UK economy or the Pound.
Boris Johnson’s statement later this morning will likely deliver new measures to curb the accelerating spread of the virus.
Stricter than anticipated measures will hurt the Pound that has struggled this morning. The markets are expecting stricter enforcement of social gatherings and the early closure of social venues in the UK.
While the service sector activity has recovered from the COVID-19 meltdown, a reintroduction of containment measures will hurt the sector.
Last week, we heard the BoE talk of negative rates. Another lockdown would certainly force the BoE’s hand and the Pound deeper into the red.