Boris Johnson suffered a humiliating blow last night, 3 September as Tory rebels joined forces with opposition parties to take back control of the House of Commons timetable and derail his Brexit strategy.
After losing his first parliamentary vote, the UK prime minister said he was ready to hold a snap general election in an attempt to regain a Parliamentary majority and the mandate form the British people before an emergency bill aimed at preventing him from taking Britain out of the European Union on 31 October without a deal has become law.
Johnson called the legislation “Jeremy Corbyn’s surrender bill”, because it would force him to beg Brussels for another extension to the Article 50 exit process, giving the EU more power to lay down the terms. The prime minister argued that unless the EU thinks he is serious about leaving the bloc on 31 October with or without a deal, he will not be able to secure a better offer at the Brussels summit on 17–18 October.
The election could take place on 14 or 15 October and would allow Johnson to seek a working majority in the House of Commons. He would then head to the summit to try to either secure a better deal or exit the EU without one.
Under the 2011 Fixed-term Parliaments Act, Johnson would need the support of two-thirds of MPs to trigger an early election. That would mean he would need the backing of Labour MPs for his plan to come to fruition.
Meanwhile, Labour and other opposition parties want to legislate against a no-deal outcome before the poll. Labour Party leader Jeremy Corbyn has said he wanted an election, but he will need assurances from Johnson that it will take place on 14 or 15 October, before the Brexit deadline.
Sterling pushed higher immediately after the vote. However, the prospect of a “hard” Brexit, which has been causing much grief to the currency market, is still real. The Pound later dropped below $1.20 and hit its lowest since a flash crash in October 2016.
The Euro was steady, at around $1.2087, having recovered from a 28-month low against the Dollar it touched yesterday as investors priced in deeper negative interest rates for longer in the Eurozone.
In the US, manufacturing activity contracted for the first time in three years last month, according to the Institute for Supply Management (ISM). The release knocked the wind out of the greenback, prompting a rally in the bond market as investors increased bets on a couple of rate cuts from the Federal Reserve before Christmas. A 25-basis-point cut is now fully priced in, while yields on benchmark 10-year Treasuries, which fall when prices rise, dropped to their lowest in two years.
Battle lines drawn as Boris threatens snap election
Data provided by