GBP/USD eases from 1.2850 levels to a session low 1.2832
It is looking increasingly likely that we will be left in a further state of flux as Johnson's hopes for an election gets thrown up in the air this morning.
The government is going to propose a motion next Monday but the question is, can they get the two-thirds majority needed to call for an election?
As things stand, if Labour doesn't back them up, they won't get the numbers.
And even if the EU grants a three-month extension, Labour may not necessarily get on board with the idea of an election because a no-deal Brexit is technically still on the table.
As highlighted earlier, the "trapdoor" to a no-deal Brexit still remains via Johnson's deal and unless that is amended, there is still a likelihood of the UK leaving the EU without a deal - just fourteen months later to today.
As such, Labour could allude to that being a reason to not support an election motion (it would be suicide anyway if they did now) and hope for other amendments to pass as well to change Johnson's deal into something totally different.
If that happens, there is no doubt Johnson would pull the plug on his deal and it would significantly weaken his position going into any election.
There's just a whole lot of political permutations at play at the moment and you can't really rule anything out at this stage. As a result, I reckon the pound may be left in limbo around 1.27 to 1.30 levels against the dollar until this is all sorted out.
