Sterling tumbles as pressure grows on PM May to step down
The British pound fell towards the weakest levels of 2019 against the US Dollar on Wednesday, as pressure grew for British PM Theresa May to step down as her latest Brexit deal failed to win the backing from key figures inside the Conservative party. The British pound suffered its ninth consecutive day of straight losses against the US Dollar and is worst losing streak ever against the euro currency.
The powerful 1922 committee, chaired by Graham Brady, officially met to discuss changing party rules, so to allow for another vote of no-confidence in Prime Minister May’s Conservative party leadership. Popular former foreign secretary, Boris Johnson, is currently the front runner to replace British PM Theresa May if a vote-of-no-confidence is motioned into action or Theresa May bows to ongoing pressure and quits as Prime Minister.
Early this week PM May presented her amended Brexit deal, which allowed for MP’s inside the House of Parliament to vote on a second referendum on Brexit only if they voted for her newly amended ten point Brexit plan. With members inside her own party firmly condemning the idea of holding a new referendum on Brexit, the future of the British Prime Minister has further been called into question.
Analysts are now speculating that politicians inside the Conservative party will wait until the results of the European elections are known before deciding on whether to oust British Prime Minister Theresa May. All indications suggest that both the Conservative and Labour parties will lose the European elections to the newly founded Brexit party and also the Liberal Democrats.
Strength in the U.S Dollar Index has also been pressuring sterling lower on the foreign exchange market, with yesterday’s release of the FOMC meeting minutes confirming the Federal Reserve’s new neutral stance towards interest rates. Markets have taken the neutral stance as being positive for the greenback, as investors previously feared that the U.S central bank may be forced to cut rates after hiking them to quickly last year and harming the overall U.S economy.
Sterling has staged a minor upside recovery after finding technical support from the 1.2623 level on Wednesday, the technicals for the GBP/USD pair are particularly bleak while price trades under the important 1.2660 level. Key upcoming support for the GBP/USD pair is found at the 1.2600 and 1.2550 levels, while major weekly resistance above the 1.2660 level is currently located at the 1.2690 and 1.2755 levels.
Written by Nathan Batchelor, External Analyst, ActivTrades
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