*Sterling breaks its four consecutive days of gain
*Boris sends an unsigned letter to the EU for Brexit extension
*Extension or no extension? Speaker of the House may say no to Johnson
*London property price index shows massive improvements; some stocks are likely to move
The Drama
Despite his defeat in Parliament over the weekend, Boris Johnson remains undeterred. The prime minister was forced to write to the EU to ask for a three-month extension of the Brexit deadline after losing a vote. However, he thinks that he has enough votes in his corner to take Britain out of the EU as per his promise before the current Brexit deadline. The prime minister is going to ask the House of Commons to support his corner in a new “meaningful vote” today.
The speaker of the House, Jon Bercow, could exercise his power and stop Johnson from holding a vote because he failed previously. The speaker could just see this as an exercise which would only waste lawmakers’ time—not that they have used it wisely so far—and make Johnson stand down from such a request.
A Stellar Month For Sterling
The British pound has lost its mojo on the back of the current development and the four-day consecutive rally for the pound against the dollar has changed its direction. However, the currency is still holding on to its over 5.2% gains month to date--its largest monthly gain since 2009.
Speaking from a technical perspective, the price is still trading above the 200-day moving average on a daily time frame and this assures bulls that the rally could continue. We think that the Sterling-Dollar pair needs more tailwind in order to cross above 1.30 mark because so far there are enough sell orders which are keeping the price below this level.
Still Holding On To Our Target
If by any miracle, Johnson secures a deal this week, something which Goldman Sachs has predicted also, we expect to see the Sterling-dollar soaring on the back of this. The move could easily push the price to our earlier price target of 1.35 for the GBP/USD pair.
Which Stocks Can Move Today?
In terms of economic numbers, the right move’s house price index has shown that the average asking price in London has improved. The data came in at 0.6% against the previous reading of -0.2%. This simply means that we are expecting the housebuilders to perform better. Name such as Barratt developments, Persimmon and Taylor Wimpey can all give the push to the FTSE 100 index.
On the back of the Rightmove’s HPI data, we are likely to see more interest in lenders such as Royal Bank of Scotland, Lloyds Banking Group and Metro bank. Improving confidence in the housing market should also improve retailers as well, and this means better performance among Tesco, Sainsbury.
Overall, the falling pound should push the FTSE 100 index higher and the upside move is going to be from British Tobacco, Diageo, and AstraZeneca where most of the revenue a large position of revenue comes from outside the shores of the UK.
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