Regardless of the political drama today, the pound is growing

The splitting of the Labor Party today does not bode well for the pounds, because political uncertainty is on the rise, which will put pressure on the Cable. However, today the currency wiped out the losses and is about to end on green territory. It is also one of the best-performing currencies for today.

The move of the small Labor Party to resign and form an independent group can cause a closer relationship with the European Union to avoid Brexit as a whole. However, this raises the chances of no-deal Brexit.

The pound for this month fell by 1% and the 10-year British bond fell to an eight-month low. Prime Minister May continues to fight for a consensus on the part of the EU to accept the proposal from colleagues in Parliament. The independent group of parliamentarians formed by former Laborists expect their colleagues from pro - European Conservatives to join them, which will further increase the chances of a hard Brexit.

"Creating a new party will cause a huge mess in Parliament, which will negatively affect the pounds, but positive for the bonds." - says Peter Chatwell, chief strategist at Mizuho International.

The Pound made a break above 23.6 Fibonacci and the 50th period, and for the moment the price stays above the levels, but encounters resistance at the 200-year moving average.

Source: Bloomberg Finance L.P.

Graphs: Used with permission of Bloomberg Finance L.P.

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