Dollar pairs are waiting for the main event of the day, which will be held at the end of the US session. This, of course, is about the announcement of the results of the October meeting of the Federal Reserve and the subsequent press conference of Jerome Powell. Given the importance of this event, it is better not to trade in dollar pairs today - at least until the position of the Fed head is clear in the light of the latest data on the US labor market, industrial production and inflation. The pair pound-dollar is no exception, and not only because of American events. The pound lives in its "coordinate system" in recent years, where the unconditional priority is the issue of Brexit.
Therefore, now GBP/USD traders are waiting not so much for the Fed meeting as for the third reading on the re-election bill in the UK. Despite all the previous voting on this issue, the Parliament has not yet set a final point, which means the intrigue is still preserved. This explains the complete suspended animation of the British currency: the GBP/USD pair has not been moving for almost the third day, demonstrating only slight fluctuations within the 30-point range. But in the end, the price returns to the middle of the 28th figure, drifting in anticipation of a powerful news impulse.
As you know, the Lower House of the British Parliament supported in the second reading the bill on the holding of early elections. Now the document was sent to the Upper House of Parliament (House of Lords) for consideration and approval. It is worth noting here that the House of Lords is not an appeal court. Having adopted their amendments, they send the document back to the Lower House of Parliament, where MPs may or may not support it. Next, the bill returns again to the Lords. In other words, the House of Lords can comment, forcing the House of Commons to come back to this issue. However, most experts doubt that the deputies of both houses of the British Parliament will play it like table tennis - at least now, in anticipation of the third reading.
For example, last month, the House of Lords approved a bill in just a few days, requiring Johnson's cabinet of ministers to ask Brussels for another postponement of the country's exit from the EU. It is noteworthy that, contrary to various assumptions, this bill was approved in the final reading without a vote - members of the Upper House of Parliament did not introduce a single amendment. The Lords showed amazing solidarity in this matter, as it managed to do so in just a few days. Members of the Upper House may also show similar efficiency now, given the fact that the dissolution of Parliament should occur 25 working days before the election.
Traders of the GBP/USD pair currently completely ignore the events, as during the third reading of the bill, deputies will discuss and vote on the amendments presented. Yesterday, Deputy Speaker Lindsay Hoyle did not allow MPs to vote on amendments that are unacceptable to the government. But at the same time, the House of Commons voted so that the deputies had the opportunity to amend on the eve of the third reading. Traders rightly fear that Johnson's so-called "unacceptable" adjustments to the law will lead to the failure of the election. Let me remind you that Downing street has already announced that it will withdraw the bill in case of approval of such amendments, in particular to reduce the age limit for voting in elections to 16 years.
However, if Johnson still manages to push his initiative, the pound may react quite rapidly. By and large, the outcome of the December elections will be a determining factor in the fate of the Brexit deal. And given the recent ratings of Conservatives, they have every chance of forming their own majority. The support of Tory representatives has already reached 40%, while the Labour Party has remained at the same level - 24%. Compared with the survey the year before last, support for Conservatives grew by 3%, but the result of the Labor Party did not change. Liberal Democrats, in turn, received 15% support in the latest poll, and Nigel Faraj's Brexit party received 10%.
Thus, any hint of approval of the third-reading early election bill will support the British currency. Most likely, this issue will be resolved before the beginning of next week. But it is unlikely that the deputies of the current Parliament will have time to consider the Johnson's deal before November 6 (the expected date of the dissolution of the House of Commons). They are unlikely to want to do this: the re-election will become a kind of "repeat referendum" on the Brexit issue, so MPs will probably not want to get ahead of the events by approving the proposed deal.
The material has been provided by InstaForex Company - www.instaforex.com