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Pound Surges As BoJo Prepares To Trigger Snap Elections

Courtesy of ZeroHedge View original post here.

After last night's humiliating defeat, Prime Minister Boris Johnson is preparing for the next step in his battle to take the UK out of the EU with or without a deal. And that is: moving to trigger a snap general election that will leave everything – including his future as PM – up to chance, according to BBG.

The pound extended its gains and rose more than 1% on the news, as short-term names unwound shorts to trigger stops, while the British currency also benefited from broad-based dollar weakness.

GBP/USD gained as much as 1.2% to trade at 1.2220, remaining near the day's highs as the market priced in lower chances of a no-deal Brexit on Oct. 31; U.K. 10-year gilt yields climbed 9bps to 0.49%.

"The move coincided with a selloff in short-dated GBP vols and may be accentuated by the latest USD weakness across the board," said Valentin Marinov, a strategist at Credit Agricole.

On Tuesday, Johnson lost his ruling majority when one Tory MP defected to join the LibDems. He then moved to expel 21 rebels from the conservative party after MPs voted to take control of Parliament's agenda to try and stop Johnson from presiding over a no deal exit.

As BBG put it – politely – in the three years since the Brexit vote, the turmoil and chaos in British government has increased dramatically.

Still, Johnson's plan could again backfire: He needs the support of the opposition Labour Party for an election. It's very possible that he won't get it (though it's equally likely that, sensing the opportunity to wrest control of government from Johnson and the Tories, Labour would happily oblige).

On Wednesday, Johnson's opponents will seize control of the Commons agenda and put forward a measure that would force the PM to seek another Brexit delay until Jan. 31. Johnson has slammed his critics and opponents, accusing them of "wrecking any deal that we might be able to strike" with the EU.


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