Sterling slumped yesterday, 23 April, having hit 1.2926 against the US Dollar at one point, its lowest level for nine weeks as UK members of Parliament returned from the Easter recess. The drop was attributed to growing pessimism around Brexit as the cross-party talks between the Conservative government and the Labour appear to have found no common ground.
Theresa May’s office said the talks had “been difficult”. Jeremy Corbyn said the government needed to move on as “we cannot go on hearing this tired old mantra that the Brexit agreement has to be adhered to”.
The Pound dropped lower as it became apparent the Conservative Party was seriously considering a decrease in the time required between no-confidence votes in leadership, which is currently 12 months. If passed, the move would allow a leadership challenge after six months, ramping up pressure on May to suggest a date for her departure, after she pledged to stand down last month if Parliament ratified her Brexit withdrawal agreement.
The Euro also suffered a bad day against the Dollar as market participants flooded to the latter in response to positive data from the US last week. Booming retail sales stirred hopes that the US economy might have fared better than expected in the first quarter of 2019. Meanwhile, the data from the Eurozone disappointed.
The Eurozone will again be in focus today as Germany will release its Business Climate Index, which is a key indicator of sentiment among business leaders in the country. The data is likely to paint a brighter picture for the German economy, but only slightly. Forecast to improve from 99.6 to 99.9, the reading is still in contraction territory (any number below 100 indicates contraction). If the release misses expectations, the Euro could lose further ground against the resurgent Dollar, having been trading at its lowest level of 1.1214 against the greenback since 2 April.
Germany cuts GDP forecast, again
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