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Sterling weak as politicians look for solutions to Brexit

The Brexit impasse is weighing on the Pound as the Tory leadership race is picking up the pace.

Centtrip: Battle lines drawn as Boris threatens snap election

Sterling tested a key technical barrier yesterday, trading as low as $1.2580 on rising fears of a no-deal Brexit as the chance of a Brexiteer winning the Conservative Party leadership race increased. Boris Johnson, who has stated that under his tenure Britain will leave the European Union on 31 October with or without a deal in place, is leading against his 11 rivals.

UK opposition leader Jeremy Corbyn resisted calls from within his Labour Party to campaign for a public vote on the Brexit withdrawal agreement, preferring instead to renegotiate with the EU to get a better deal, then put it to the people. Meanwhile, EU chief negotiator Michel Barnier reiterated that the Brexit talks will not be reopened for a new prime minister and the current withdrawal agreement was “the only option” if Britain wishes to leave in an orderly fashion.

Donald Trump has announced a 5 per cent tariff on all Mexican goods in a bid to curb illegal immigration. The US president tweeted yesterday that the new levy would come into effect on 10 June and would rise slowly “until the immigration problem is remedied”. The announcement came the same day the White House told Congress it planned to pursue a new trade deal with Canada and Mexico.

Today Germany will release its Consumer Price Index (CPI) data, which is expected to show inflation in Europe’s largest economy is waning. It fell from 2 per cent in April to 1.6 per cent in May – a worrying sign for the Eurozone. The European Central Bank (ECB) has little to no room to manoeuvre to reignite growth as interest rates are already negative and a form of quantitative easing is only due to start in September. The week could end in a volatile fashion for the Euro, with 2019 lows against the Dollar in sight.

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