Breaking news: December elections look likely for UK

Summary:

• Labour lends support to pre-Christmas election

• Parliamentary vote expected this evening 

• GBP ticks higher in response

Despite failing a third attempt to call a general election there is a growing feeling that Boris Johnson could be soon set to get his way and send Britons back to the ballot box before the year is out. The chances of a victory in Monday’s vote were always highly improbable given the two-thirds majority needed under the Fixed Term Parliament Act, but this evening there is a very real chance that a bill could pass which would call an election before Christmas - almost certainly in the week commencing Monday December 9th.

Little is straightforward here, as is seemingly always the case with Brexit, with potential amendments such as lowering the voting age to 16 seen by some as possible wrecking tactics. However, with recent reports that Labour will get behind a December election and only a simple majority (>50%) needed then it seems likely that the PM will now get his wish. 

The initial market reaction to this has been quite curious with the pound actually rising in response to the news. Elections are often seen as bringing heightened uncertainty and therefore negative in the near-term for affected markets, but in this case there is a hope that it will bring an end to the present quandary we find ourselves in. The pound will likely stay fairly well supported unless a no-deal outcome becomes more than marginally possible once more and there is also the hope that a softer version of Brexit than the latest WAB could receive greater support.    

GBP has edged higher since the news that Labour would back an election hit the wires with GBPUSD up by around 45 pips since. Source: xStation