The Pound exchange rate has come crashing down in the past few sessions, with notable losses against the US Dollar (GBP/USD) to reside below the key 1.40 barrier. Sterling has slipped on Brexit concerns once again amid mounting calls for Theresa May to quit her post. While the Pound may have reached the dazzling heights of 1.43 last week on Brexit optimism, this week looks as if it may tell a very different story.
On Monday, the House of Lords Constitution Committee announced more bad news on the Brexit front, saying the bill had ‘fundamental flaws’ and clearly stated that it would need substantial alterations.
While divisions inside the Conservative Party have always been present, the start of the year saw investors shake them off as Brexit optimism surged, allowing Sterling to attain it’s highest level against the US Dollar (GBP/USD) since the Brexit vote. However, cracks within the party are deepening as it can’t decide on what kind of Brexit deal the UK needs.
Currency expert at Mizuho Bank Neil Jones said:
‘If May is under threat right now it’s a double whammy for the Pound. General political uncertainty rarely benefits a currency. Also May is deemed as a soft Brexiter while her replacement may be more hard-line.’
The EU has been calling for the UK to make its position on a preferred Brexit deal clear, but Bloomberg has today reported that people close to the situation have suggested May is asking the EU to ‘come up with ideas on how a future relationship might work’. Meanwhile, The Times has reported that Theresa May has lost the support of around a quarter of Tory donors which would rather she stepped down. Additionally, a leaked report has shown that the UK will be worse off in every way as a result of Brexit. The report tested out different scenarios and how the UK fared under each one and was supposed to be unveiled this week at internal government discussions ahead of talks with the EU.
Tuesday will see the highly influential US Consumer Confidence figure revealed, while Bank of England (BoE) Governor Mark Carney will also speak before lawmakers.
The Pound to US Dollar (GBP/USD) exchange rate is currently trending at levels of 1.4030, having already sank to lows of 1.3978 so far in today’s session.