The Great Britain pound jumped today after the latest developments in British politics reduced chances for a no-deal Brexit. That was a huge relief for investors as cutting trading ties with the European Union will likely have a tremendous negative impact on Britain’s economy.
Rebel lawmakers including members of the opposition Labour party as well as several members of the ruling Conservative party won the vote in the House of Commons to seize the control of Parliament’s agenda. Now, they want to rush with the bill that will prevent the United Kingdom from leaving the EU with no deal on October 31. In response, Prime Minister Boris Johnson fired the rebel Conservative members from the party and tabled a motion to initiate a general election on October 14.
While the sterling welcomed the news, the currency trimmed its gains after the release of the services sector data. The seasonally adjusted IHS Markit/CIPS UK Services PMI dropped to 50.6 in August from 51.4 in July. Analysts had predicted a smaller drop to 51.0. With the services sector index getting dangerously close to the 50.0 no-growth level and the construction and manufacturing sectors being firmly in the contractionary territory, fears of a recession in Britain are growing.
GBP/USD jumped from 1.2083 to 1.2191 as of 15:21 GMT today. EUR/GBP declined from 0.9083 to 0.9044, touching the low of 0.9018 intraday. GBP/JPY jumped from 127.99 to 129.47.
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