Theresa May is set to address parliament today, a day earlier than had been scheduled, with an update over Brexit progress. Suggestions are that little which is new will be brought to the table, although there are reports of a growing number of Labour MPs who are seeking to support the current deal. A consensus to request more negotiating time has the ability to lend some support to the Pound which has lost ground amid renewed fears of a no-deal Brexit.
There’s a sub-text to the Brexit story with ministers now hinting that the Prime Minister could offer to resign in the summer. While this may persuade some hard-line pro-Brexit MPs to back the deal, it blows open the political risks. Theresa May has only managed to hold onto a majority thanks to support from the Democratic Unionist Party in Northern Ireland. If a new party leader cannot manage this, it would lead to a minority government and pave the way for another general election. Jeremy Corbyn’s approval ratings may be bruised, but the accompanying period of uncertainty could knock Sterling.
A deal has been struck over US border security funding to avert another government shutdown. Questions remain unanswered over what happens to the promised border wall with Mexico, but the fact that Federal departments will remain open has the potential to be seen as positive news for the Dollar.
The Pound sold off heavily against the US Dollar yesterday morning in the wake of disappointing UK GDP figures, sliding to lows not seen in around three weeks. A very modest rebound has now been seen, but Theresa May’s parliamentary update is likely to be instrumental in determining whether the sell-off can be stopped.
The Euro pushed down to fresh lows for the year against the US Dollar yesterday, although progress over US government funding may drive some risk-taking and in turn help reverse this slide in the near-term.
Losses from the poor UK GDP number yesterday resulted in some modest selling, but otherwise, the Pound has been trading in a very tight range against the Euro. There’s a degree of anticipation over what Theresa May will say in Parliament later so a sharp reaction to this news could well follow.