The GBPUSD rate broke below the key psychological $1.30 price yesterday, as US dollar strength and GBP weakness combined to push the pair lower by 0.80 cents at one point. The short-term health of the Great British Pound does not look too rosy.
It’s recently been announced that the UK will have to participate in European elections at the end of the month. In addition to this, it’s now clear that talks between the Conservatives and the Labour Party have virtually concluded with zero solutions identified. The question is – where do we go from here?
As it stands, a significant group of Conservatives are attempting to push PM May out, citing the benefits from a fresh pair of hands taking over the number 1 spot. However, she’s not going to go easily and with the ability to use a ‘no confidence vote’ taken away after it was used last year, it’s a tough ask to successfully dislodge a prime minister.
It’s become apparent May would like to get another vote through Parliament in the next few weeks. This will almost certainly be her final attempt to achieve what she’s been aiming for over these last few years. Sadly, while the situation remains fragile, the pound is likely to suffer. Levels to watch out for on the downside include $1.2850 and €1.15 against the US dollar and euro, respectively.
Today’s session will be dominated by US economic data. We’ll see the producer price index, jobless claims, trade balance and a speech from Fed chair Jay Powell all taking place across lunchtime. US dollar exposed clients be aware.
Written by Viv Savani. 8:19am, May 9th 2019
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