FX.co ★ GBP/USD. Pound under attack: UK political crisis worsens

The optimism of traders regarding the court's unblocking of the British Parliament's work did not last long. After a short-term test of the 25th figure, the GBP/USD pair turned around and rushed to two-week lows. At the moment, the pair settled in the middle of the 23rd figure, responding to the worsening political crisis. The period of silence was replaced by loud battles in the walls of the House of Commons. The fault line passed not only between the government and the deputies, but even between members of the same party. The pound suddenly came under pressure from fundamental problems, including the lack of a unified position in the House of Commons, the impending early elections in Parliament, and pessimistic comments from representatives of the negotiating group.

After the court verdict was announced, the Speaker of the House of Commons John Bercow immediately convened a meeting of Parliament. Today, deputies again gathered in the walls of the Palace of Westminster, where Prime Minister Johnson also arrived, who interrupted his participation in the session of the UN General Assembly and returned to London. Of course, the head of government today heard a lot of criticism addressed to him, as well as many calls for resignation. But if we ignore the emotional factor, then by and large, the British Parliament, as a result, again found itself in a dead end, primarily due to internal party contradictions.

First of all, it is worth saying that Boris Johnson has already managed to declare that he is not going to resign. He said that he "completely disagreed" with the verdict of the Supreme Court, although he respected the decision of the judges. Nevertheless, he insists on the correctness of his position, so he sees no reason to resign. It is noteworthy that the leader of the Labour Party, Jeremy Corbin, is in no hurry to initiate the issue of declaring a vote of no confidence in the prime minister. In his opinion, the Parliament should first of all prevent the "hard" Brexit on October 31, and only after that solve the remaining issues - about distrust of the government and early elections. Not everyone in the camp of the Labour Party supports this algorithm of action. Moreover, according to the results of the party conference, the Labour Party will no longer directly advocate for the abolition of Brexit as such. At the insistence of Corbyn (and he was supported by the majority of delegates), the Labour Party will first get early elections, win them to form a majority in Parliament, hold talks with Brussels - and only then will they put this issue to a referendum.

Boris Johnson is also pushing for early elections - but for a different purpose. According to some opinion polls, Conservatives can strengthen their success and, based on the results of an extraordinary plebiscite, form their own majority. In this case, the prime minister will have all the power - and even if Brexit has to be transferred on October 31, no one will put a spoke in the wheels on the threshold of the next "deadline". But here it is necessary to make an important remark: Conservatives had a significant advantage even before a series of scandals that could well change the picture of electoral preferences.

We are talking not only about the last unprecedented case when the court recognized the Queen's decree unlawful. Other scandals can affect the rating of Johnson, and accordingly the Conservatives. In particular, we are talking about Johnson's allocation of public money from the budget of London to his friend from the United States. These events unfolded even when the prime minister was the mayor of the British capital, but details surfaced only now. According to the Sunday Times, between 2013 and 2014, Arcuri's company Innotech received sponsorship from the City Hall in the amount of 100 thousand pounds. According to reporters, the company was initially denied a grant, as its business did not meet the criteria. But after Johnson's intervention, the company was then given permission. Now, the prime minister's opponents are actively promoting this situation, demanding appropriate explanations from the head of government.

Thus, the absence of a consolidated position among the opposition, as well as Johnson's intention to "pull out Britain from the EU at all costs" on October 31, puts strong pressure on the British currency. In other words, the British currency is once again losing ground: the House of Commons still rejects Theresa May's deal, Johnson does not take any real action to find a compromise with Brussels, and the prospects for early elections only increase the likelihood of a "hard" Brexit - not in October, so at the beginning of next year. Al this happens against the backdrop of the soft rhetoric of the Bank of England, whose head linked the prospects of Brexit with the prospects of monetary policy.

Given such an array of negative fundamental factors, it can be assumed that the downward movement of the GBP/USD pair will continue (including after a possible price pullback). The intermediate target of the bulls of the pair is 1.2270 (the Kijun-sen line on the daily chart), while the main target is located lower - at 1.2190 (the lower border of the Kumo cloud on the same timeframe). Having overcome this target, the GBP/USD bears will open their way to the area of annual lows, that is, to the area of 20-19 figures.