British Pound Crashes as PM May Faces Rebellion in Parliament

The British pound today rallied slightly higher in the early European session following the release of positive UK jobs data. The pound later witnessed a massive drop following Brexit headlines indicating that some Tory MPs were planning to sabotage PM May’s Brexit negotiating plan.

The GBP/USD currency pair today crashed from a high of 1.3269 to a low of 1.3146 as investors reacted to the Brexit jitters.

The publication of the UK labour market report by the Office for National Statistics is what triggered the currency pair’s initial rally. The UK recorded 137,000 new jobs on a quarterly basis in May as opposed to the expected 115,000 new jobs. The ILO unemployment rate met expectations at 4.2%, while the claimant count rate for June remained stable at 2.5%. The pound was further affected by comments from the Bank of England Governor Mark Carney in the bank’s financial stability report where he warned about the likely impact of Brexit on the country’s economy.

The pound headed lower after news headlines indicated that Labour Party MPs were likely to support an amendment to Theresa May‘s Brexit plan that would keep the UK in the customs union after Brexit. The currency pair’s decline was further accelerated by the resurgent demand for the greenback as tracked by the US Dollar Index.

The currency pair’s future performance is likely to be affected by tomorrow’s UK CPI data, Brexit headlines, and US housing starts data.

The GBP/USD currency pair was trading at 1.3173 as at 15:14 GMT having dropped from a daily high of 1.3269. The GBP/JPY currency pair was trading at 148.59 having declined from a high of 149.10.

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