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It's not for nothing that Boris Johnson is called eccentric and cheerful since only such a person could arrange such an incredible performance as blocking the work of the House of Commons. All the mass media of agitation and misinformation yesterday was full of headlines stating that Boris Johnson had suspended the work of parliament, which is somewhat untrue. The fact is that the House of Commons is still not working because the people's representatives have a vacation. Moreover, the first meeting should be held on September 3. However, each new session begins with a speech by the monarch in front of both houses of parliament, that is, in front of the House of Commons and the House of Lords. This is such a small formality related to British traditions. Therefore, Boris Johnson, who is well aware that his opponents in the House of Commons can easily make him a happy life, not just by blocking the adoption of a divorce agreement with Europe without trade and economic components, which will never be there, but also to turn the emerging negotiation process with the European Union into a living Hell with the unexpected visit of Elizabeth II. Assigned to be Prime Minister in accordance with all democratic norms, Boris Johnson asked the Queen to postpone his speech until October 14, and as Her Majesty, she accepted such a proposal. In other words, Boris Johnson intends to deprive his opponents of any influence in the process. And then, when the house of Commons finally reopens, simply to put them all on the table, forcing them to accept the agreement that he will put on the table. There will be no time left as Brexit is scheduled for October 31, so there's no room for maneuver. Naturally, such a move by Boris Johnson instantly led to the fall of the pound, which in its move perfectly illustrated the fate of the current prime minister, who signed the death sentence for his political career. Even Winston Churchill in WWII could not have thought of a parliamentary shutdown.
At the same time, the single European currency continued its dismal downward movement, which is largely due to long-term factors rather than immediate whims. Crucially, a basic difference in the size of the Federal Reserve's refinancing rates with the European Central Bank unambiguously contributes to a gradual strengthening of the dollar. After all, if there is a choice, purchase bonds with a yield of 2.25% or 0.00% as the choice seem obvious. The size of the refinancing rate directly affects the yields of government bonds.
Federal Reserve Refinancing Rate:
European Central Bank Refinancing Rate:
However, a deviation from the usual picture is possible today since the second estimate of the United States GDP for the second quarter may show a slightly larger slowdown in economic growth. If the first estimate showed a slowdown from 2.7% to 2.3%, then the second is already up to 2.2%. Naturally, a stronger slowdown in economic growth will renew the cries of the imminent recession that awaits the United States next year, and everyone will shout about the need to immediately reduce the refinancing rate of the Federal Reserve as the only measure that can save the US economy. Thus, the usual decline in the single European currency, albeit temporarily, can be replaced by growth.
US Gross Domestic Product Growth Dynamics:
It's a bit more complicated with the pound as it's still full of emotions, and everyone's waiting for an answer from Jeremy Corbin, who gathered yesterday to discuss the situation of opponents of Boris Johnson. Among them are the conservatives to which the prime minister belongs. So British politicians can mix all the cards once again and bring an unexpected surprise. Moreover, mass protests have already started in the UK, which is organized by labor.
The Euro/Dollar currency pair is gradually, but confidently recovering after Friday's jump. At the moment, the price returns to the recent accumulation of 1.1066/1.1100. It is likely to assume that the current slowdown in the region of 1.1080 (+/- 10 p.) may serve as temporary support, where a rebound towards 1.1100-1.1120 is possible against the background of the news flow.
The Pound/Dollar currency pair has shown a really strong downward movement against the background of the information flow, as I wrote above. It is likely that pressure on the pound will still remain in the market, but I do not exclude a further decline.
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