Foreign Exchange Daily Market Update 10/07/18

Tue, July 10, 2018

Pound weakens as resignations increases doubts about May's survival.

Sterling fell as Foreign Secretary Boris Johnson’s resignation leads to many asking the question if Theresa May will face a leadership challenge.

Sterling loss its gains after Boris, who was the face of the campaign to exit the EU, followed Brexit Secretary David Davis in stepping down over disagreements about the PM’s strategy for leaving the bloc. If a move by lawmakers to try ousting the prime minister could lead the sterling to fall as low as $1.25. 

Sterling had strengthened earlier on Monday as the market judged the resignation of Brexit Secretary Davis opened the way for the prime minister to seek a closer relationship with the EU. The PM told Parliament on Monday that the country will be leaving the EU’s single market and customs union, as she came under fire from some of her own lawmakers and the opposition.

The pound could weaken as low as $1.25 on a leadership challenge, however it could rallying as high as $1.34 on a Brexit strategy deal which also gains the backing of the EU.

Sterling fell 0.3% to $1.3241 yesterday afternoon, after gaining as much as 0.6% earlier in the day. It fell 0.3% against the euro to 1.127.

Data to look out today.   

Not much data due out today.

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