GBP/USD News: Theresa May Survives Leadership Challenge

GBP EUR Exchange Rate: The Week Ahead August 15th

May continues as Prime Minister

Yesterday evening, UK PM Theresa May survived a vote of no confidence with a majority victory of 83. Despite the victory it was far from convincing having lost nearly a third of the party. The PM will not now face another vote for at least 12 months from her own Party.

There is still the chance that a motion of no confidence could be triggered in the House of Commons which has the potential to bring down her Government if backed by more than 50% of all MPs.

May has stood firm following the victory and intends to continue with her attempt to get a Brexit deal. The vote on her proposed deal will now be postponed and she will have to agree changes with Brussels in order to get a deal through. The Irish border being the point of contention.

It seems one of the concessions to Theresa May gaining much needed support last night before the ballot was that she would not run at the next election.

There are rumours that the majority of MPs in the House of Commons are against Brexit in general and they intend to vote the deal down even if there are improvements.

This means we are at risk of the dreaded no deal scenario which would no doubt hurt the Pound considerably. I think a more likely outcome would be a second referendum which polls suggest would result in the UK remaining in the EU and boost Sterling value.

The view from the US

Trump has threatened a Government shut down if he does not get the “okay” on his border wall. This would have the potential to weaken the Dollar, but I would not rely on this as a reason to hang fire if I was buying USD.

The Pound has suffered of late and current trading levels for USD sellers are at some of the best levels since 2017. Investors are still flooding to the greenback with the promise of safety and high returns due to global economic uncertainty. I think the Pound will remain fragile short to medium term so don’t have higher hopes than 1.29 in current market conditions if you are selling Sterling.

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