Foreign Exchange Daily Market Update 20/11/18

Tue, November 20, 2018

Sterling looks set to fall further.

Sterling could weaken further as markets brace for the possibility of a no-confidence vote in Theresa May’s leadership.

As sterling was trying to recover yesterday. The Sun reported that 42 lawmakers have sent letters of no confidence against May, with six more needed to trigger a leadership challenge.

Sterling slipped more than 1% last week after several of the PM’s ministers quit in disagreement over her Brexit divorce deal with the EU. The political unrest has opened a multitude of risks for sterling, including the prospect of new elections or even a second referendum.

Should Theresa May manage to stay on, she will still have a challenge getting her Brexit deal through parliament which leaves the U.K. tied to the EU’s customs union.

Theresa May spent Monday appealing to business leaders, addressing the Confederation of British Industry to convince them to back an agreement few in her own party think is ideal.

Now no news is good news for the pound, yet it would quickly come back under downward pressure if a leadership challenge is called in the coming days.

Sterling gained 0.2% to $1.2838 this morning. Against the euro, its advanced 0.3% to 1.1246 after having slumped close to 2% last week.

Data to look out today.   

Not much data due out today.

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