For the first time since 1923, the United Kingdom will hold general elections in December to break the impasse associated with Brexit, CNBC reports.
The corresponding bill in the British Parliament was introduced by Prime Minister Boris Johnson. The opposition agreed with the proposal of the head of government only after the European Union agreed to postpone Brexit for three months - until January 31, 2020.
On the eve of the election, 438 deputies of the House of Commons spoke in favor, 20 against it.
"This Parliament is broken and dead, so it must be dissolved. There is no support among the deputies in promoting a law that will make ratification of the deal with the EU a reality. Universal voting is needed to put an end to the uncertainty surrounding Brexit, which undermines public confidence, "says B. Johnson.
For the elections to take place within the agreed time, the Parliament must be dissolved no later than November 6th. Johnson has five working days left for the bill to go through the remaining stages of approval. The bill approved by the House of Commons should now be considered by the House of Lords, whose members have the right to amend it and return it to the lower house for new reading. The bill will gain the force of law after it is signed by Queen Elizabeth II.
Everything indicates that the document will be approved on time, and in December the British will go to the polls for the third time in four years.
According to analysts, this election promises to be one of the most unpredictable in the history of the United Kingdom. It is still unknown whether they will help Great Britain break the current political impasse.
It is assumed that if the Conservatives win, a "divorce" agreement will be signed with Brussels. If the Labour Party prevails, they will propose a new referendum.
According to recent polls, the advantage is still on the Tory side. They are 10% ahead of the Labour Party. However, five weeks before the election, the situation can radically change.
"In the short term and during the election campaign, we consider the pound a little vulnerable, given the recent elimination of Brexit risk without a deal. Nevertheless, the early elections were mostly an expected event and, as such, should not cause a serious reaction from the GBP," say Danske Bank strategists.
"The EUR/GBP pair will trade in the range of 0.85-0.90 before the election. If Conservatives get a majority in the House of Commons, then EUR/GBP will shift to the lower limit of this range of about 0.8750. The victory of the opposition will strengthen hopes for the abolition of Brexit and support the pound with a probability of a break below 0.85. The suspended Parliament will create new uncertainty, but the growth potential of the EUR/GBP pair is likely to continue to be limited to 0.90, they predict.
Specialists at Standard Chartered advise buying the pound against the US dollar amid increasing prospects for early general elections in December.
They recommend a long position on GBP/USD with a target at 1.3350 and a stop order at 1.2700.
"The prospect of early elections in December removes political obstacles to a deal on Brexit. At the same time, the probability of Britain leaving the EU without a deal is reduced to zero," experts said.
The material has been provided by InstaForex Company - www.instaforex.com