The Pound started it’s rollercoaster journey yesterday after the two cabinet resignations from Brexit Secretary David Davis and Foreign Secretary Boris Johnson in Theresa May’s government within 24 hours. The Pound fell sharply after the Boris Johnson resignation was announced after 3pm yesterday but has since made a very small recovery with rates for GBP EUR sitting just below 1.13 for the pair.
The markets are now guessing whether or not there will be a vote of no confidence in the Prime Minister, which could cause a leadership challenge which could see a new Prime Minister if Theresa May was unable to see off that challenge. For this to happen there would need to be a total of 48 Tory MP signatures which would trigger that vote and so far that has not yet been reached. The next important part to this will come from the eagerly awaited white paper on Brexit which will give considerable detail as to where this is heading.
If Leave supporting politicians feel Britain is giving too much away then this is when that vote of no confidence could take place. Prominent Brexiteer Nigel Farage has also made clear he will return to win votes in a general election to ensure Brexit does take place. This week has the potential to be a big market mover for Sterling exchange rates especially with the white paper being released on Thursday. Any further resignations are also likely to see the Pound weaken again and if they continue one by one then this could amount to a sizeable drop for Sterling.
This afternoon sees the Gross Domestic Product estimate from the National Institute for Economic and Social Research (NIESR). The numbers are usually held in high regard as they have proven to be an excellent precursor to the official data released later. A strong number today would help paint a better picture of the British economy and could help persuade the Bank of England to raise interest rates at the August meeting.
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