Pound US dollar exchange rate: GBP sinks as Theresa May opens way for second referendum
The pairing fell following yesterday’s speech by Prime Minister Theresa May in which she outlined her final effort to win over MPs in favour of her ‘new’ Brexit deal. However, her efforts seemed to have fallen flat with MPs rejecting it across the political spectrum. Mrs May offered a vote on a referendum, if her deal passes through Parliament, angering many MPs. Labour leader Jeremy Corbyn said: “We won’t back a repackaged version of the same old deal – and it’s clear that this weak and disintegrating government is unable [to] deliver on its own commitments.
“If Theresa May is now supporting a second referendum, it makes it very hard for me to support the latest [deal] when it comes to the House of Commons … This is a betrayal of the 2016 referendum.”
This latest political impasse has weakened the pound today, as traders are becoming increasingly jittery over fears that the withdrawal agreement will be rejected in June, increasing the chances of the UK leaving the European Union without a deal with the EU.
The US dollar, meanwhile, has risen despite rising fears that US businesses in China could face ‘retaliation’ following the restriction on the Chinese telecom giant, Huawei.
Tim Stratford, the AmCham China Chairman, said: “Particularly in the wake of the decision to put Huawei on the … entity list, there are concerns that the government of China may decide to retaliate against American companies.
“These are real concerns, and they increase the risk as people are considering how they should make adjustments to their business models.”
Any tariffs on American businesses in China could potentially hurt the US economy, and this is leaving many greenback traders cautious as the two superpowers clash.
Today will see the release of the US Federal Open Market Committee minutes report, and with any bullish comments about the economy, the greenback could rise further.
The pound, meanwhile, will likely remain sensitive to ongoing Brexit developments, and as markets are already gloomy due to the Prime Minister’s ‘new deal’ any further rejections by MPs would prove negative for Sterling.