GBP Plunges As Boris Johnson Threatens to Suspend Parliament

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1. GBP Plunges As Boris Johnson Threatens to Suspend Parliament

The British pound dropped sharply on reports that the U.K. Parliament will be prorogued by Boris Johnson — essentially put on leave — for five weeks. The BBC reported that the move will allow Johnson’s new administration to hold a Queen’s Speech on Oct. 14. This e means that MPs are unlikely to have time to pass any laws that could stop the prime minister taking the U.K. out of the European Union without a deal on Oct. 31, the BBC reported.*


2. Bourses Edge Lower

While we seem to be at the edge of a global recession with a Sino/U.S. trade war and a no-deal Brexit scenario just exacerbating the situation, global bourses reacted mildly by turning only marginally lower today. It appears that markets remain quiet as they look for a direction for their next big move which will most likely be downwards. Global bourses are also pressured by the overnight inversion of a closely watched U.S. Treasury yield curve to its worst level in more than a decade, reigniting fears of an impending recession. The only support for markets presently is a possible rate cut by the U.S. Federal Reserve. It should be noted, however, that former Fed member Dudley released a statement that the Fed should oppose Trump as every rate cut would be a green light for further escalation of the trade war.**


3. Trump’s Credibility Becomes an Issue, Again

After some false statements by U.S. President Donald Trump, that China called his administration to restart trade talks, Trump’s credibility has become a key obstacle for China to reach a lasting deal with the U.S. Meanwhile, another smoking gun is that Deutsche Bank told a federal appeals court on Tuesday that it was in possession of some tax returns sought by congressional subpoenas issued earlier this year to President Trump, his family and his businesses. But why did Deutsche Bank choose to come forward now? We would definitely keep an eye on how that situation plays out.***


4. Oil Edges Higher, Gold and BTC Stable

Oil traded higher suddenly on a big draw in the API’s last night and Iran making it clear it won’t meet the US without seeing sanctions removed. Elsewhere, spot gold remained close to the $1540 range awaiting new bigger risk-relevant movements. BTC also seems to have stabilised at the 10k level with no immediate prospect of moving away from that level at the moment.****


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*MarketWatch Aug 28, 2019 03:07 AM ET
**Reuters Aug 28, 2019 3:53 AM ET
***CNBC Aug 28, 2019 2:48 AM ET
****Investing Aug 28, 2019 05:20 AM ET

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