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Sterling drops below $1.27 for first time since January amid Brexit woes

By Michele Maatouk

Date: Tuesday 21 May 2019

LONDON (ShareCast) - (Sharecast News) - Sterling fell below $1.27 on Tuesday for the first time since mid-January, weighed down by worries about Brexit.
Theresa May has said she will put the withdrawal agreement bill to a vote in Parliament in the week of 3 June and is due to face her cabinet later in the day for one final attempt at securing their backing.

At 1000 BST, the pound was down 0.3% against the dollar at 1.2694 and 0.1% lower versus the euro at 1.1386.

Spreadex analyst Connor Campbell said: "The prospect of Thursday's European elections, one set to by Nigel Farage's Brexit party, combined with the latest vote on Theresa May's deal at the start of June, left the currency saddled with a sense of helplessness."

Neil Wilson, chief market analyst at Markets.com, said there are twin drivers for GBPUSD: Brexit fears hitting sterling and a strengthening greenback on the back of heightened tensions between the US and China.

"There is just no bid for sterling so we can only expect a bounce for the pair should the dollar give it up. Bulls will no doubt keep trying to pick up pennies in front of this steam roller," he said.

Wilson said that with Brexit "still as clear as mud", traders are de-risking from the pound.

"It's last chance saloon for Theresa May and her deal and we think she's going to be out before long with a new PM installed. May is today attempting to persuade cabinet colleagues she can get the deal through next month, but it looks dead in the water. Labour won't budge to help her out. I'd reiterate the view that we are heading to either no-deal or no Brexit, a binary outcome that will keep traders on the sidelines."

With May's withdrawal agreement unlikely to get through parliament next month, investors are shifting their attention to her replacement.

XTB market analyst David Cheetham said her exit paves the way for a "more extreme" outcome, namely no deal or a second referendum.

"What happens next is pretty much anyone's guess but the main concern in the markets remains that the six-month extension from the EU could well be as far as the bloc is willing to go without a clear change of tact from the UK, and as things stand the default outcome in the absence of an extension would be a no-deal Brexit."

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Market Data

Currency Rate Chg
AUD 0.1848 +0.0001
CAD 0.1744 +0.0001
CHF 0.1211 0.0000
CNY 0.9038 -0.0000
DKK 0.8481 -0.0001
EUR 0.1139 -0.0000
GBP 0.1023 0.0000
INR 9.6710 0.0000
JPY 13.8416 +0.0026
NOK 1.2101 +0.0003
NZD 0.1963 +0.0001
SEK 1.1845 +0.0001
SGD 0.1796 0.0000
THB 4.0303 +0.0041
TWD 3.7902 -0.0105
USD 0.1290 0.0000
ZAR 2.1863 +0.0010

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