The pound now faces even more Brexit headwinds after a Conservative party leadership challenge has been called first thing this morning. The Chair of the 1922 Committee Sir Graham Brady has now received the required 48 letters from Conservative politicians to trigger a vote of no confidence in Prime Minister Theresa May. In a twist the pound the has seen material gains with rates for GBP to EUR moving higher towards 1.11 for the pair. Pound to Euro rates are likely to see a hugely volatile few days as developments unfold and the markets begin to guess the outcome of this vote of no confidence.
A vote will be held later between 6pm & 8pm this evening to decide if there will be a leadership challenge. The prime Minister requires the support of 158 Conservative MP’s to see off the challenge and if found then Theresa may will be safe for 12 months. However other storms are brewing as it has been reported that the Labour government are also preparing to trigger a vote of no confidence in the government which could see major volatility for GBP vs EUR.
The vote appears to have arisen after the Prime Minister failed to bring back concessions with regards the Irish backstop with EU leaders saying there could be no further negotiations. Jean Claude Juncker stated that there was “no room whatsoever for renegotiation”. Whilst France have stated that they are now preparing for a no deal Brexit the uncertainty over Brexit is increasing by the day. The European Commission is also set to focus on no deal planning.
Despite Brexit the UK received some welcome economic data yesterday after it was reported that UK wage growth saw a good jump higher yesterday. All bets are still on a for a UK interest rate increase in 2019 although until Brexit is resolved the pound is unlikely to benefit from such a prospect.
Those clients looking to buy or sell Euros should pay close attention to these developments as high volatility is to be expected. The default option if there is no deal agreed with be a “no deal” which continues to keep the pound at these weaker levels.
For more information on these latest developments please feel free to contact me James at email@example.com