Pound sinks, May to step down by the summer?
Philip McHugh May 17th 2019 - 2 minute read
The pound fell to new multi-month lows on Thursday as Theresa May agreed to set out a timetable for her departure as PM.
Sterling remains subdued this morning, with GBP/EUR muted at €1.1431, GBP/USD flat at $1.2780 and GBP/CAD rangebound at C$1.7213, while GBP/AUD and GBP/NZD both hold steady at AU$1.8558 and NZ$1.9533 respectively.
Coming up today, we may see the fall in GBP exchange rates continue, depending on how recent developments may affect the cross-party Brexit talks.
What’s been happening?
The pound’s found itself on the back foot again yesterday, extending its losses for the week as it became clear that Theresa May’s days as PM were well and truly numbered.
Following a meeting with the 1922 committee of Tory backbenchers it was announced that May would outline a timetable for her departure after MPs vote on her Brexit deal again at the start of June, no matter the outcome.
This prompted speculation that she would likely be out of the door before the summer recess, increasing the political uncertainty surrounding Sterling.
However, the GBP/EUR exchange rate was able to temper its losses on Thursday as the euro was also exposed to political uncertainty amid growing signs that the tense coalition in Italy could be split by Deputy Prime Minister Matteo Salvini’s push to increase spending in disregard to EU deficit rules.
Meanwhile, the GBP/USD exchange rate touched a four-month low yesterday as investors continued to flock to the safe-haven US dollar, with trade war jitters being stoked by Donald Trump who barred Chinese telecoms giant from working with US companies.
What’s coming up?
Looking ahead, we may see the pound continue to face pressure today as UK politics likely remains in focus, with Labour expected to walk away from the cross-party talks as it becomes clear May can no longer make any lasting commitments.
Meanwhile, the publication of US confidence data could impact the US dollar later this afternoon, with a modest uptick in consumer sentiment in May likely to lend further support to USD exchange rates.
Finally, with today’s CPI figures unlikely to influence the euro as they confirm the results of a preliminary reading, the focus for EUR investors is likely to remain on European politics as markets brace for next week’s EU elections.