The pound has endured a troubled start to the week, continuing an 11-day stretch of consecutive losses against the euro on Monday. The interbank rate reached a 4-month low against the dollar yesterday, after fresh fears of a No-deal Brexit looking increasing likely due to a breakdown in talks between Labour and the Conservatives.
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Yesterday evening however, the pound recovered some of the losses it had endured throughout the morning’s trading to avoid a 12th consecutive day of losses, after Theresa May delivered a speech on her revised withdrawal bill. She will hope to gain more support from Labour MPs on the fourth time of asking after including compromises brought about from her recent talks with Jeremy Corbyn.
May’s message was clear from the outset, as she billed her revised plan as MPs’ ‘one last chance’ to deliver Brexit, which involves a vote on a second referendum (which has already been voted against previously) if they back the revised deal when it is voted on in the first week of June. The key points from May’s revised plan are:
There was immediately some negative reaction to May’s speech from Labour MPs on Twitter who stated they would not be supporting the new deal. If May fails to get the deal through, then it seems likely she will stand down and the chances of a No-deal Brexit will increase.
A host of Tory MPs have also reacted negatively to the deal, with Boris Johnson and Dominic Raab, who supported the deal in the third round of voting, have stated that they cannot support the deal. Some are even calling on the PM to quit immediately so keep an eye out for rumours as they unfold over the coming days as these could affect the strength of the pound.
Other potential outcomes include a general election, or no Brexit altogether, and it is highly likely there will be market volatility regardless of the end result.
In terms of data sets for the remainder of this week, inflation figures this morning at 09.30 are expected to show an increase month on month, which could offer a shot in the arm for the pound. Friday morning’s retail sales figures however look set to show a sharp decline for April and if that is the case the pound could come under some pressure.
The closing down of a number of Jamie Oliver’s restaurant chains this week, along with fears that Thomas Cook and British Steel could go into administration hitting the headlines, give a good indication of how the UK economy is currently faring and could have a knock-on effect to the pound’s value in the future.
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