The pound paired with the dollar reacted weakly to the high-profile events of the weekend as the British currency continues to slowly slide down, phlegmatically testing the borders of the 22nd figure. Although there were plenty of informational reasons for increased volatility, British politicians are actively discussing the impeachment against Boris Johnson (with the prospect of prosecution). Germany announced her readiness to postpone Brexit. One of the members of the British regulator did not rule out a reduction in the rate in the negative region, and Jeremy Corbin again became one likely candidate for the post of prime minister. All these events and rumors were virtually ignored by the pound. It seems that traders are waiting for real steps by politicians, while rumors and intentions have little effect on the dynamics of the currency.
Trump having undergone impeachment proceedings, rumors that Johnson could repeat the path of his colleague appeared in the British press over the weekend. According to journalists, the relevant submission may be submitted to the House of Commons. as early as this week. The initiators of the procedure were representatives of the Welsh party "Play Camry". In their opinion, Johnson should not go unpunished after the situation with the British parliament. According to the Welsh, the prime minister organized a political scam, which involved not only the government but also the queen, persuading her to sign a deliberately illegal document. Today, representatives of the Labor Party and the Liberal Democratic Party will discuss the prospects of this bill and according to many experts, no scenarios can be ruled out at the moment.
It is worth noting that in the history of Great Britain, as in the history of the United States, there has never been a precedent for the removal of the actual head of state through impeachment proceedings. The last time in Britain such a procedure was launched 171 years ago in 1848 against Foreign Minister Henry Palmerstone, who was accused of secret agreements with Moscow. Thus, on the one hand, in the context of modern history, this will be an unprecedented step on the part of British MPs. On the other hand, Johnson's actions were also unprecedented. In the entire history of Britain, there was no case when the Supreme Court recognized the Queen's decision as unlawful.
In addition to the impeachment procedure, another threat "hung" over Johnson. The announcement of a vote of no confidence against him. This issue should be initiated earlier this week by two opposition parties - the Labor Party and the Scottish People's Party. According to the British press, the opposition can put this issue to a vote at a time when most conservative deputies will not be present in the hall. Their annual party conference is scheduled this week.
But as political experts believe, this scenario is beneficial for Johnson himself, who wants to enter the early elections, in the hope of gaining an "own" majority in parliament. Therefore, the Labor Party is unlikely to support the above initiative. In their opinion, the issue of elections should be raised only after October 31, when the threat of the "tough" Brexit will pass -at least until January 2020 (the estimated date for the postponement). Now another option is being discussed in the opposition camp. The announcement of a vote of no confidence in Johnson and the simultaneous vote for a temporary candidate, Corbin. According to this scenario, the leader of the Labor Party, as head of government, agrees with Brussels to extend the negotiation process and after that announces elections to the House of Commons. This scenario is only at the preliminary discussion stage, so the pound reacted poorly to the published information.
There is another reason for the phlegmatic British currency. The fact is that the fork in events is actually more simple and straightforward: either the head of government (whether Johnson or any other) by some miracle negotiates a deal with Brussels until October 31, or the country goes to early elections after prolonging the negotiation process until January 2020. Judging by the results of opinion polls, conservatives continue to outstrip the Labor Party by 8-10% despite all the previous scandals. In other words, all current events and intentions do not solve the problem as a whole.
If the Tories maintain this rating, then Johnson will not only not retain his position in the future, but will also strengthen his influence in parliament. Such prospects continue to put pressure on the pound despite all the opposition's attempts to counter the current prime minister. Against this background, the rest of the news is losing its "appeal." For example, the Briton ignored the message that Germany was ready to provide another deferment to London. Again, prolonging the negotiation process solves the "here and now" problem, but the general political puzzle remains unresolved, and the most realistic scenarios only increase the likelihood of the implementation of a "hard" Brexit.
Thus, in the long run, the British currency will continue to be under pressure. Yet, here it is worth considering that if Johnson is indeed declared a vote of no confidence with the simultaneous appointment of Corbin, the pound will receive temporary (but strong enough) support. This fact will allow the bulls of the GBP/USD pair to go for large-scale correction up to the borders of the 26th figure. From these price values, it will be possible to consider short positions since further events (elections, conservative victory, tightening of the Brexit position) can exert mirrored pressure on the pound, returning it to the levels of multi-year lows.
