Sterling is trading near six month lows as uncertainty over Britain’s departure from the European Union is continuing to weigh heavy on the pound. Investors have been offloading the currency and buying other assets like gold as they brace for lower British interest rates in response to slowing global growth. Political uncertainty is also causing the pound to weaken in recent weeks with a no-deal Brexit becoming a real reality if either Boris Johnson or Jeremy Hunt take charge as they have previously stated they would consider to walk away from the EU without a deal.
Philip Rycroft former permanent secretary speaking on Monday went onto say that Brexit was an ‘unprecedented situation’ and ‘the biggest exercise across the government over the last few decades’. Mr Rycroft believes that the UK have planned ‘brilliantly’ in preparation for Brexit but believes a no deal could cause major damage to the trade relationship between the UK and EU and believes the UK will be ‘stepping into the unknown’ by leaving without a deal. He went onto say that a no deal Brexit is not in the interests of both the UK and EU and stated that they should push harder to secure a deal which will benefit both parties.
Lastly British lawmakers from both Labour and Conservative said they were looking to prevent the country’s next prime minster perusing a no-deal Brexit. Boris Johnson, the frontrunner to become the new prime minster said Britain must leave with or without a deal on 31st October but may find it difficult to leave without a deal as the Conservative party do not have a majority in parliament and most lawmakers in parliament oppose a no-deal Brexit. Labour’s trade spokesman Barry Gardiner said his party would call a no confidence vote in the government when it believed enough Conservatives would support it. Several Conservatives have said they would consider voting to try to bring down a government which was pursuing a ‘no deal’.
13:45 – USD: FED Chair Powell Speaks