May announces she's taking control of Brexit negotiations - Supports GBP
Good afternoon everyone,
The pound continued it's unexpected mini recovery since yesterday evening, after PM May said she and her office would take over the negotiations with Europe. This has seen GBP/EUR move back above a key resistance level of €1.1240 but is not looking like it will move higher without anymore positive updates.
Lawmakers will now go on holiday, where it will be harder for them to plot against Pm May. But the parliamentary arithmetic won’t change over the summer. If former Brexit Minister Steve Baker is right, there could be 80 Conservative MPs who don’t like her plan. The question becomes whether they will vote for her anyway to avoid Brexit being derailed altogether, and whether May can pick off enough opposition lawmakers to vote with her.
President Trump meets with European Commission President Juncker and EU trade commissioner Malmstrom to discuss trade. The aim, at least on the EU side, will be to try to de-escalate the situation, although Mr Trump’s recent tweet that "Tariffs are the greatest!" suggests a potentially tricky encounter awaits.
Some analysts are suggesting that Sterling exchange rates could spike higher the closer we get to next Thursday's BoE meeting. Analysts at Skandinaviska Enskilda Banken (SEB) are saying that traders/clients looking to do GBP/EUR exchanges should use any short-term strength as an opportunity to make their exchange. They believe Sterling will benefit in the short term but Brexit concerns will come back into focus and Sterling will find itself back under pressure again.