Another concerning day for the pound as the cable rate (GBPUSD) slips into the $1.25s during late London dealing hours.
The pound can’t catch a break at the moment. The constant barrage of negative political headlines have ensured the beleaguered currency has remained under the cosh for almost 3 weeks now. The worrying part, it does not look like it will ease up anytime soon. The hurdles ahead include Theresa May’s smooth departure from office, the Tory party selecting 2 candidates for potential leadership and from here, these 2 individuals going head to head for a period of time before 1 is finally selected.
The above process will take a number of weeks to conclude. This all has to take place before we see the possibility of the withdrawal agreement being altered in any way, shape or form. In fact, communication between the UK and European Union will likely be minimal now we do not have any clear long-term leader in position. As the days turn into weeks the pound is sure to feel the pressure. The next level of support comes in at the $1.25 figure itself, from here the following area comes in at the flash crash low from earlier this year at $1.2430.
The pound/euro rate is not seeing as much downside traction. The eurozone has its own significant problems which are netting off against the pound’s woes. As a result the rate seems to have found a modicum of support around the €1.13 figure.
Overnight, Chinese manufacturing numbers have come in lighter than forecast, creating a small amount of panic across global stock markets with the FX reaction rather tame. Today sees Germany retail sales numbers as well as a measure of US inflation at lunchtime.
Have a good weekend.
Written by Viv Savani. 9:11am, May 31st 2019
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