“Am I going to see this through? Yes.” – Theresa May
There is no better way to describe yesterday’s price action in GBP other than a roller coaster ride! The pound rose then dropped significantly while seeing 30/40 point jumps and dips throughout the trading day. There are too many important events which occurred yesterday to run through this morning. Summarised: following Dominc Raab’s resignation early doors and a number of other senior and junior resignations, it became clear PM May was under huge pressure to resign herself. She bravely addressed the House of Commons and took questions from various MPs on the nature of the withdrawal agreement she’s brought home. Later in the afternoon, as speculation on her job security rose, she scheduled a press conference for 5pm. This led to further anxiety across GBP pairs as many speculated what course of action she was going to take. It turns out that PM May came out fighting and confirmed she was going to see this through. The ball is now in the court of the rebel MPs as to what happens from here. Whether you like or dislike Theresa May you must admire her resilience.
The pound ended up finding support against the greenback in the $1.27s and the €1.12s against the shared currency. The next few weeks are absolutely crucial for PM May and sterling’s progression will be very much linked to her deal’s ability to pass in the Commons but also whether she can or can’t keep her job. Major levels to watch for each of these pairs are $1.2660 (yearly lows seen back in August) and €1.1110 (90p EUR/GBP equivalent). Keep your seat belts fastened ladies and gentlemen, it appears this latest roller coaster ride has only just begun. Enjoy the weekend.
Written by Vivek Savani. 11:36am, November 16th 2018
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