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This morning, the Conservative Party has triggered a vote of no confidence in Prime Minister Theresa May. At least 48 letters have been given to the Chair of the 1922 committee, signalling that the Conservative Party no longer have faith in the Prime Minster to deliver the deal for Brexit. As this is breaking news, I would recommend being in touch with us early to find out how this will affect your trade throughout the day, as the vote won’t happen until later today. At present the pound remains steady as there is still a chance that she can win back confidence, however in my opinion the pound has a much larger possibility of falling further than it does of gaining strength.
Prime Minister Theresa May’s hopes for a re-negotiation of the Brexit deal were dashed yesterday as reports emerged that both European Commissioner Jean Claude Juncker and German Chancellor Angela Merkel both told Theresa May there will be no re-negotiation on the Brexit deal as she travelled to the Hague to discuss the Irish Border backstop.
The Prime Minister will head to Ireland later today to open talks with the Irish Prime Minister Leo Varadkar, but what they will talk about is unclear. Theresa May’s spokeswoman said that the British Parliament is due to vote on a deal on or before the 21st January and if no deal has been reached, Parliament would be given the option to debate on the issues.
What is clear is the pressure that the Prime Minister is surely to be under as she returns to Government unable to re-negotiate a deal and fights for her leadership. The pound fell to a 20 month low against the Greenback yesterday, (GBPUSD 1.2490) on news that a vote of no confidence has been triggered this morning.
Despite official data released yesterday showing that UK workers received their biggest pay rises in the 3 months up to October, Sterling remained unmoved as political tensions dominate sterling’s value.
What is interesting to note is that whilst on going short term uncertainties remain, the labour market seems to be ignoring the Brexit debarkle for now and is keeping hopes for a 2019 interest rate alive.
For now though, markets are firmly fixed on Brexit. One week volatility remains close to the highest levels this year with the spread of month volatility for the euro the biggest since the 2016 referendum and second largest in the euro’s history, 20 years. In my opinion, if this volatility turns into reality, we will see the pound becoming a lot cheaper to buy across the board.
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