The rout in Sterling continued yesterday, 22 May as it became clear that Theresa May’s “bold, new plan” lost vital support within her Cabinet and her tenure is likely to end before she has a chance to bring her Brexit withdrawal agreement to vote for a fourth time, and could come as early as tomorrow, The Times reported.
The Leader of the House of Commons, Andrea Leadsom, resigned from the Cabinet yesterday. In her resignation letter she said, “I no longer believe that our approach will deliver on the referendum result.” She also said holding a second referendum would be “dangerously divisive”.
The Pound fell to $1.2633, a new 2019 low against the Dollar, and €1.1373 – its lowest level against the Euro since 14 February. Sterling is under pressure from a number of scenarios, with the ongoing trade war between China and the US adding to the Brexit turmoil.
Meanwhile, the US has urged South Korean companies to reject Huawei’s products in a move that will escalate tensions further. In response, investors have switched to a “risk-off” sentiment, which means they are looking for value in safe-havens boosting the Dollar, Yen, gold, Swiss Franc and other safer assets.
We expect a swathe of data releases this morning, including the Purchasing Manager’s Index (PMI) data for France, Germany and the Eurozone as a whole, and weekly unemployment and PMI data for the US this afternoon.
Also today, the UK will decide on Members of the European Parliament. The results will be released the night of 26 May, once the rest of Europe have also voted.
Despite the data releases, any further developments or resignations around Brexit are likely to set direction for the day.
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