Brexit resignations lead to trouble for May and the investors. The pound dived after Cabinet ministers quit in protest at the Prime Minister Theresa May’s draft Brexit deal.
Sterling fell more than 1% against the greenback and sank more than 1.5% against the single currency to €1.1309. Further, the British currency is set for its second biggest drop this year.
On Wednesday, May struggled to secure Cabinet backing for the draft Brexit agreement with Brussels but she finally did it. Traders generally welcomed the agreement, as it avoided the consequences of a non-deal Brexit. Initially the pound had rallied after the Prime Minister announced she had the cabinet backing for her Brexit withdrawal plan.
Wednesday’s trading had been volatile, while the outcome of Theresa May’s five-hour meeting with cabinet colleagues remained unclear. However, on Thursday morning sterling fell after Junior Northern Ireland Minister Shailesh Vara quit in protest over the agreement. Then, it dropped sharply when Brexit Secretary Dominic Raab resigned.
Forex – Commodities – Brexit resignations caused pound chaos
Britain’s Brexit deal with the EU was plunged into uncertainty spooking investors across currency markets.
The dollar jumped, and traders bought into the safe-haven yen on Thursday. The dollar index firmed 0.5% to 97.268.
The Yen gained 0.2% to 113.42 against the dollar. The Japanese currency was up 0.3% versus the euro.
The single currency after earlier trading 0.3% higher, fell 0.2% to $1.1291.
The Australian dollar jumped more than 0.8% to $0.7294 after upbeat jobs data. The New Zealand dollar also rose. Both later gave up some of those gains. Investors turned more cautious about taking on risk in currency markets following sterling’s slide lower.
In commodities the mood was much calmer. U.S. oil futures CLc1 steadied at $56.35 a barrel, after a slight bounce overnight. Brent LCOc1 was up 0.4 percent at $66.42.
Sources: Reuters, CNN money, BBC
PLEASE NOTE The information above is not investment advice.