The leading Cabinet Brexiteer Michael Gove was the latest senior politician to criticize UK Prime Minster Theresa May’s Brexit deal with Brussels, although he did not go as far as saying it was unworkable.
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He suggested however that despite many reports to the contrary, the PM could still win the key vote on December 11th, when MPs will decide whether or not to rubberstamp Mrs May’s deal.
Talking on the Andrew Marr show, he also said if MPs vote against the deal, then there could be a commons majority for another referendum.
Despite such a decisive statement, investors remained cautious about any potential outcomes, with the Pound failing to make any significant gains against a basket of major currencies.
In truth, Sterling has failed to sustain any recent gains made against either the EUR or USD, falling back towards 1.12 and 1.27 respectively. Any positive momentum with Brexit developments have been countered by political infighting and concerns over whether we will actually see a deal with the EU come to fruition.
Due to this recurring trend it seems as though investors have lost confidence in a long-term solution and in my opinion this means it is unlikely we will see the Pound spike aggressively, ahead of the December 11th vote.
In other news Labour could push for another general election should the PM fail to push through her Brexit deal with Brussels. It is likely that they would table a no confidence motion, in a bid to topple Mrs May.
Shadow Brexit secretary Sir Ken Starmer said “if the PM had lost a vote of that significance then there has to be a question of confidence in the Government.
This potential outcome will likely put further doubt in investors’ minds, with political uncertainty always likely to handicap the currency in question, as the markets become concerned about stability within the Government.
If these reports gather pace and/or Mrs May looks as if she is losing further support within her own party, then the market concern will grow, which could also heap further pressure on the already fragile Pound.
Looking ahead this week and economic data for the UK is sparse. It is likely that the market's focus will remain firmly on Brexit developments and any indication as to whether Theresa May is likely to gain the support she needs from fellow MPs to push through her much maligned Brexit deal with Brussels.
Beyond this investors will be keeping an eye on Markit Manufacturing data today, which is expected to show an improvement from last month to 51.5.
Tuesday could also bring some volatility for the Pound with Bank of England Governor Mark Carney speech likely to provide further updates from the Central Bank, as to the state of the UK economy and the potential downturn associated with Brexit.
This is followed by more PMI figures in the form of Construction output, which is expected to show a small drop from last month’s figure to 52.6.
This is followed on Wednesday by Services PMI, which is predicted to show a small improvement on the previous figure to 52.5.
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