- Internal Market Bill clears first round of Parliamentary vote
- Growing rebellion within the Conservative Party
- Further downside of GBP/USD (D1)
GBP/USD kickstarted this week with a strong rally, only to find itself returning half of its gains on the second half of yesterday. And the reason? A majority voted in favor of the tabled Internal Market Bill at the UK Parliament yesterday. The bill, which contains Prime Minister Johnson’s plan to amend the Brexit Withdrawal Agreement, secured a victory with a majority of 77 (340 voted for and 263 voted against the bill). Despite the victory, several high-profile members of Johnson’s Conservative Party were against the bill, stating that they will not support a bill that will constitute to a breach of international law. (Check out this article to learn more about how the Internal Market Bill affects the Withdrawal Agreement)
The next hurdle for Johnson will come next week when Members of Parliament vote on an amendment that grants the House of Commons a final say on the implementation of the Internal Market Bill. This time, the Prime Minister will face a bigger challenge since the House of Lords will not allow the House of Commons to have the final say over a crucial matter. Besides, the growing rebellion within his own party will simply add fuel on fire.
For now, we see that GBP/USD is trading on a pullback while attempting to break above the 1.29 handle. Fundamentally, the downside of GBP/USD is definitely higher than its upside. If another strong rejection of the 1.29 handle were to happen, that will indicate a good selling opportunity of GBP/USD.