Rates as of 0700 GMT

Market Recap

GBP had a volatile day yesterday, ranging from a low of 1.2431 at the start of business in London to 1.2599 in the New York afternoon. Its come down a bit this morning but its still substantially higher than it was Tuesday morning.

The reversal in GBP wasnt necessarily due to any news out of the UK there wasnt any, in fact but rather due to a reversal in USD. As the graph shows, GBPUSD red line generally followed the overall trend for USD as shown by its tradeweighted index blue line. It may have bounced further simply because it had been pushed down so far by the noconfidence vote on PM Boorish Johnson.

On the contrary, the news about GBP remains unremittingly bad. PM Johnson plans to press ahead with legislation giving him the power to override parts of the Brexit deal. The draft bill may be put forward tomorrow. Reopening this Pandoras can of worms would be a disaster for the UK and GBP as it would probably result in either a trade war, a legal war, or both with the EU.

The only thing is, markets seem to be focusing on UK monetary policy and not particularly concerned about UK politics. PM Johnson seems safe for the moment, more because as they say in politics you cant beat someone with no one theres no one whos particularly popular among the Conservative Party MPs who would naturally take his place. As for the Nothern Ireland fiascowell, maybe investors are just tired of hearing about this story, which has been going on for…