2018 has hit rock bottom for the Pound, with the largest intraday losses so far this year. Whether the floor ends up being a stable footing from which to begin to recover will be discovered over the coming days, however, as far as today’s European session is concerned, Sterling has failed to catch a sustained bid. Domestic Sterling markets have lost only a few basis points short of 2% against the US Dollar since Theresa May announced the Cabinet’s backing behind her Brexit deal, outside of Number 10 Downing Street, yesterday evening. Whilst the Euro has also faced a headwind as a result of the domestic political instability that has thrown doubt over the capacity of the government to even survive long enough to see the deal go through parliament, the set of 7 resignations over the past 24 hours, due to the controversial deal, has introduced doubt in investors’ minds about the possibility of a Labour government headed by May’s counterpart, Jeremy Corbyn. The left-leaning leader of the opposition party is thought to be bad for the Pound, threatening to undo the progress of fiscal austerity and consolidation that Cameron’s government under the Chancellorship of George Osborne and May’s government under the Exchequer of Phillip Hammond has managed to produce. Moreover, with a similarly divided party vis-à-vis Brexit, the scope of a Labour party to clear up UK-EU politics seems similarly, if not more, limited. The impression today leaves the global FX map with a bold red nose as the United Kingdom possesses the weakest currency on the day. Weak retail sales data, falling short of expectations by some 0.5%, also helped to drive the Pound lower. Emerging markets have taken advantaged of today’s weaker US Dollar and Pound Sterling with the perceived risk profiles of currencies including the South African Rand and Turkish Lira gaining considerable ground.
Today’s Global Market:
Discussion and Analysis by Charles Porter