Pound weakened by calls for general election
Philip McHugh September 26th 2019 - < 1 minute read
The pound trended lower yesterday as the UK’s uncertain political situation dominated headlines.
Sterling is largely holding steady today with GBP/EUR trading at €1.1279, GBP/USD trending at $1.2344 and GBP/CAD edging down to C$1.6352. GBP/AUD is lingering around the day’s opening levels of $1.8266 but GBP/NZD is down 0.5% to trade in the region of NZ$1.9588.
What’s been happening?
Sterling stumbled yesterday as the return of parliament triggered lively scenes.
Prime Minister Boris Johnson stressed that he is still committed to the UK leaving the EU on 31st October, deal or no deal.
As calls for his resignation intensified he also challenged opposition parties to hold a confidence vote in the government to clear the way for a general election.
However, opposition parties are demanding that the risk of a no-deal Brexit is removed first, so the situation is currently in deadlock.
Elsewhere, the political situation in the US and US-China trade speculation undermined risk appetite, boosting the US dollar and weakening currencies like AUD and NZD.
What’s coming up?
UK politics remains the driving force behind GBP exchange rates, and investors will be paying close attention to the latest headlines.
Any confirmation that the UK will be heading to the polls could trigger Sterling volatility.
The UK’s GfK consumer confidence index will also be published overnight, but the report is unlikely to have much impact in the face of weightier concerns.
As it stands economists are predicting a modest improvement from -13 to -14.
Meanwhile, the euro could be pressured lower today if the European Central Bank’s (ECB) economic bulletin provides cause for concern.
The US dollar could maintain an upward bias if risk-off sentiment prevails.