Sterling has been coming under increasing pressure over the past few days, after seeing a downward trend since the first week of this month which has seen the pound lose close to 4% against the US dollar and the euro.
Pound to US dollar rate falls amid political uncertainty
The drop has accelerated since it became official that cross party talks between the Conservative and Labour parties have broken down, leaving UK Prime Minister May in an unenviable position now. MP’s are due to vote on her Brexit deal once again next month, which will be the forth vote on her deal. Political experts are expecting another loss for her and perhaps by a larger margin than her previous vote.
Theresa May under continued pressure to step down, how could this affect the pound to US dollar rate?
Late yesterday afternoon the leader of the House of Commons, Andrea Leadsom resigned and claimed that the reason behind her departure is due to her belief that May’s government will fail to deliver Brexit. May’s position will most likely remain under pressure in the coming weeks with some predicting that she will step down before this weekend even. I personally think that if she is to step down, we could see the pound drop further as the UK is running out of time to arrange the Brexit before the next deadline of October the 31st.
Not only has the pound been weakening, but the US dollar has been going from strength to strength due to the global uncertainty surrounding the UK-China trade war. The US dollar is a safe haven currency and tends to benefit in times of global uncertainty or economic slowdowns, so the upward trend for the US dollar may well continue.
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