UK currency slumps

UK currency slumps

On Wednesday, the British pound dived following reports of a probable leadership challenge to UK Prime Minister Theresa May.

The British pound went down by about 0.25% hitting $1.2994 versus the evergreen buck right after the BBC informed that a group of 50 lawmakers in May's cabinet had a meeting in order to negotiate how and when they could force her to resign.

Eventually, the given lawmakers have condemned her plans for the United Kingdom to stay in a free trade zone for products with the European Union after it leaves this trading bloc in March next year.

The UK currency later revived to stand still at nearly $1.3028. Meanwhile, versus the common currency the UK pound stood still reaching 89.010 pence per euro.

In choppy trade for recent days, the UK currency had reached a five-week maximum of $1.3087 on renewed expectations of a speedy Brexit deal with Brussels.

While recent indications from Brussels have pointed to resumed confidence that the United Kingdom and the EU are capable of agreing a deal to have trading relations governed after Brexit, divisions within May's cabinet over Brexit keep rattling financial markets.

The UK currency has lurched up and down on nearly every Brexit-related news last  week due to the fact that market participants struggle to find out whether the UK is able to avert a no-deal Brexit when it escapes from the European bloc or not.

Upbeat economic data in the United Kingdom published this week, with relatively strong GDP figures have been generally neglected because market participants pay attention to Brexit developments.

Financial analysts and investors tell that a great number of market participants don’t want to take out big directional bets on the UK currency due to the uncertainty about where the Brexit talks are headed.

 

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