Sterling has ridden the waves of volatility over the past months, having reached its highest level since the Brexit referendum in June 2016, amid questions if an agreement with the European Union is now in sight.
UK politics, like the Brexit negotiations, are poised ahead of a crunch meeting of EU leaders in Brussels this weekend to finalise Britain’s exit agreement. The other 27 EU member states could help complete a major part of the jigsaw puzzle, which will be a turning point not only for the protracted and painful talks, but also for the fragile Pound.
UK Prime Minister Theresa May’s proposed divorce deal requires the consent of all EU countries and approval of the European Parliament. However, the biggest hurdle will be getting the Brexit treaty passed through the UK Parliament.
May has faced tough times in the last couple of weeks.
Brexit Secretary Dominic Raab’s decision to quit was a big blow, causing the Pound to plummet by 1.7 per cent against the US Dollar. May rushed to reassure investors and members of the public in her speech just hours after three more members of parliament resigned, bringing the total number of resignations under her tenure to 20.
Sterling rallied but the move was modest and short-lived.
Rebellious Tory Eurosceptics are pushing to oust the Conservative Party leader. Led by Jacob Rees-Mogg, this group is collecting names to hold a vote of no confidence in the prime minister’s leadership. Under the 1922 Committee’s rules, 48 Tory members must submit individual no confidence letters to Sir Graham Brady, the committee chairperson, who will oversee any challenge of May’s leadership.
The prime minister’s removal is likely to trigger either an early general election or a second referendum. Both outcomes could prevent Brexit – a risk the Eurosceptics would be foolish to take.
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