Pound euro exchange rate: GBP climbs as Theresa May faces no confidence vote
Pound euro exchange rate: GBP jumped on news of Theresa May facing a no confidence vote (Image: GETTY)
At least 48 MPs have submitted letters of no-confidence in the Prime Minister to the Chair of the 1922 Committee, Sir Graham Brady, meaning a vote will be forced on Mrs May’s position as leader. The pound immediately jumped on the news, although it is not clear exactly why, with any number of possible scenarios leading either to a ‘Brexit lite’ or ‘no-deal’, depending on a range of variables. Many traders are simply refusing to trade the British currency at all until Brexit-related turmoil dies down. One currency trader, Damien Loh, Chief Investment Officer at Singapore-based hedge fund Ensemble Capital, explained why his company is now steering clear of the pound.
POUND LIVE: LATEST GBP MOVEMENT HERE
Pound LIVE: GBP Sterling JUMPS as May no confidence vote TRIGGERED Europe stock market edges HIGHER on Donald Trump and Theresa May
He said: “I’m staying out of it – it’s basically like trying to pick a roller coaster as your commuter.”
Another trader, Australia-based Shane Oliver of AMP Capital, called Sterling “a bit of comic relief … like a British comedy”.
He added: “I’ll say stay away for now. It’s just too hard to trade the pound.
“You can’t really trade it on technicals because it’s driven by political announcements that flip and flop.”
The euro is also facing trouble today as doubts are raised about French President Emmanuel Macron’s promise to raise the minimum wage and slash taxes – a move that would lead to a budget deficit of 3.5 per cent – easily outstripping Italy’s 2.4 per cent deficit.
With the EC still mulling punitive measures against Rome for its seeming refusal to downwardly adjust its 2019 budget, which is in contravention of EU deficit rules, Mr Macron’s concession to the ‘Gilets Jaunes’ protesters is likely to be political ammunition for the Italian government and could destabilise the euro.
At the same time, reports are circulating that Mr Macron will face a vote of no-confidence in the French parliament on Thursday in reaction to his handling of the protests and the concessions he has granted.
Despite this, the euro is holding up on markets today with Eurozone industrial production figures for October being published this morning, revealing an as-expected rise of 0.2 per cent.
There will be no more data releases relating to either the UK or the Eurozone for the rest of today, meaning the pound euro pairing will likely be driven by the latest headlines regarding the no-confidence vote in Mrs May.