Sterling fell to a two and a half week low yesterday as fears mounted that Theresa May’s leadership would be challenged this week following an inability to resolve the Irish Border issue.
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The main headline yesterday was that the Democratic Unionist Party of Northern Ireland, who backed the Conservative Party to form a coalition in the UK were going to block Theresa May’s plans to create a backstop for the Irish border.
These rumours have led to sterling coming under immense pressure as we start the week, losing nearly a percent against a strengthening dollar yesterday at the day high compared to the day low.
Yesterday afternoon, Theresa May tried to calm the markets by addressing the House of Commons and intended to ‘break the impasse’ in a four point plan that would hopefully move negotiations past the Irish Border issue. However, last night Guy Verhofstafh, EU Parliament Brexit chief rejected her plan, as the plan breaches her commitments to the Irish border.
With little noticeable data out for the U.K. this week, all eyes are firmly fixed on Prime Minister Theresa May. Andy Haldane, a monetary policy member will deliver a speech at 9.30 this morning, however his comments are likely to be overlooked with developments surrounding Brexit.
As we start today, the Prime Minister ended yesterday’s talks by saying a deal was ‘95% reached’, but the Irish border remains an issue. I do feel as though her leadership now lies in her ability to keep all parties, including her own satisfied with regards to the Irish Border issue and if she doesn’t, GBP could majorly suffer as a result.
At such crucial times, it would be a good idea to get in touch with your broker to set out a plan of action for each possibility regarding Brexit.
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