Sterling volatile ahead of no confidence vote on Theresa May
The pound has been on a rollercoaster ride this morning as it reacts to a series of political shocks.
Reports that the Conservative party were set to trigger a vote of no confidence in Prime Minister Theresa May – confirmed this morning – sent the pound to a fresh 20-month low against the dollar yesterday.
May’s announcement this morning that she will fight the no-confidence vote gave some reassurance and this morning the pound rose slightly against the dollar to hover just above $1.25.
Simon Harvey, FX analyst at Monex Europe, said: "Both Theresa May and sterling are under renewed pressure as the Prime Minister seeks to navigate a vote of no confidence and battle for her job this evening.”
He added: “Sterling briefly rallied in anticipation of May’s statement, paring yesterday’s losses as investors positioned themselves for the main event.”
Harvey predicted ongoing sterling volatility as the UK’s politics continues to be uncertain.
“The only given this morning is that volatility in sterling will rise in the run-up to tonight’s vote as Conservative MP’s begin to voice their stance," he said.
Hamish Muress, currency analyst at OFX, said: “Theresa May’s decision to fight for her job has left the pound in a state of limbo. With rumours now driving the currency as much as facts, the rest of the day for both market watchers and political analysts will be spent adding up Tory MPs and trying to work out whether the PM will be ousted.
"Uncertainty is the word of the day, and all eyes will be on tonight's vote. The prospect of a general election would not be good news, and it’s no secret that sterling strives for stability.”