Pound edges lower as cross-party Brexit talks struggle and PM under pressure
The pound has edged lower this week as cross-party talks between Labour and the Conservatives appear to be collapsing and Theresa May is under pressure to set a date for her resignation as PM.
Poor results for the two main UK parties in last week’s local elections had temporarily boosted the pound as some analysts predicted that there would be a fresh impetus for them to work out an agreement on Brexit. Comments over the weekend and in the past few days indicate, however, that this is not the case and that we’re likely to go back to square one regarding Brexit and take part in the upcoming European elections.
Further uncertainty is mounting over Theresa May’s position as PM and we are likely to find out soon when she’ll be expected to give notice of her departure and therefore when a leadership contest will occur.
As a result, both the GBP/EUR and GBP/USD are both down by around 1% from Friday afternoon’s high. However, they both remain at fairly buoyant levels and trapped within the recent ranges. Brexit and political developments remain the key focus for Sterling traders. The downside from the political uncertainty is being counterbalanced by increased odds of a no Brexit scenario from a second referendum (and the reduction of no-deal odds).
The volatility index has been low since before Easter and things remain relatively subdued for now. We will let you know of any significant developments though.