FX Update: The pound has taken a rotation lower
FX Update: The pound has taken a rotation lower following the UK parliament's rejection of PM Johnson's program bill to fast track the ratification of the EU withdrawal legislation. This means that Brexit will not happen on October 31, unless the EU decided to refuse an extension -- which is highly unlikely, as Brussels will not want to get the blame for a no-deal Brexit scenario (the pound would crashing if markets believed that it was of a mind not to grant an extension). The EU is widely understood to be preparing some kind of flexible extension to the October 31 deadline. Johnson is now in a tough situation, as he leads a minority government, now lacking the support of Northern Ireland's DUP and the loyalty of the 20 Conservative MPs who were ejected from the parliamentary party, not to mention the one defector to the Liberal Democrats. This means the opposition are in a powerful position to made amendments to the bill, including making the deal subject to a confirmatory referendum. Labour, meanwhile, has said that it will back an out-of-cycle general election, which would happen either in late November or early December. The pound has corrected some more of the strong gains seen over the last couple of weeks. Cable posted a five-day low at 1.2841, extending the decline from the five-month peak seen on Tuesday at 1.3012, while GBP-JPY descended into six-day low terrain. The euro has also weakened against most currencies, outside the case against sterling. EUR-USD carved out a five-day low at 1.1116, extending a correction from the 11-week peak seen on Monday at 1.1179. EUR-JPY printed a six-day low, at 120.38, though sterling underperformance propelled EUR-GBP to a five-day high at 0.8658.