GBP/USD has fallen below 1.20 on Tuesday, the lowest levels since October 2016 as all the focus shifts to the escalating political crisis surrounding Brexit. At the time of writing, GBP/USD is trading at around 1.197.

The Parliament recess comes to an end today and as lawmakers return after summer, a group of lawmakers across parties are considering requesting an emergency debate and to seize control of the agenda in the House of Commons. In a bid to stop a no-deal Brexit scenario, this group of lawmakers could very well force the Parliament to vote to stop Johnson’s plans to prorogue the Parliament.

There’s also a looming possibility of the UK being forced into early general elections. If the vote passes, Johnson could force general elections as early as October 14. However, the vote can only pass if it enjoys a two-thirds majority, a scenario which is possible only if rebel members of the Conservative Party support this move.

Rising political risks and growing concerns about the UK exiting the Union without a deal in place are exerting immense pressure on the Sterling and on UK’s economy. Markets fear that leaving without a deal could push the economy into recession and have adverse long-term impact on economic growth.