The Pound (GBP) slid lower against the majority of its peers on Thursday as markets became increasingly worried about the possibility that Theresa May could be ousted as Prime Minister.
While such reports have shadowed the PM ever since the general election earlier in the year, a disastrous speech by May at the Conservative party conference seems to have emboldened her critics and led to renewed calls for her resignation.
While political uncertainty is never welcomed by markets, investors are particularly worried about what impact a leadership battle could have on Brexit negotiations.
The Pound Euro (GBP EUR) exchange rate fell by around half a cent yesterday as markets became increasingly perturbed by the political climate in the UK.
The single currency was also bolstered by the release of the minutes from the European Central Bank’s (ECB) most recent policy meeting, with investors welcoming discussions by policymakers about plans to taper their stimulus programme next year.
Meanwhile, further strengthening the Euro this morning was the publication of Germany’s latest factory order figures as data showed that they rebounded strongly from -0.4% to 3.6% in August.
Sterling slumped to a new four-week low against the US Dollar (USD) yesterday as the US Chamber of Commerce reported that the domestic trade deficit shrank faster than expected in August.
Also pushing the ‘Greenback’ higher on Thursday were comments by Philadelphia Federal Reserve President Patrick Harker, who signalled that he is still anticipating a December rate hike despite inflation still remaining below target.
Meanwhile, the US Dollar could climb even higher this afternoon with the release of the latest US non-farm payrolls report, with some analysts forecasting that figures may come in above target after some upbeat employment data earlier in the week.
The Pound Canadian Dollar (GBP CAD) exchange rate rallied from a three week low yesterday as Canada’s latest trade balance showed that the domestic trade deficit unexpectedly grew in August.
Meanwhile, the ‘Loonie’ may slip again later today as economists forecast that Canada’s unemployment rate will have risen slightly in September.
Sterling found some momentary respite against the Australian Dollar (AUD) overnight on Thursday following suggestions that Australia’s recent decline in retail sales could prompt the Reserve Bank of Australia (RBA) to contemplate cutting interest rates.
New Zealand Dollar
After tumbling nearly a cent on Thursday morning the Pound New Zealand Dollar (GBP NZD) exchange rate is currently holding steady as both currencies are subdued by domestic political uncertainty.