The pound is struggling this morning after Theresa Mays offer to quit as Prime Minister failed to persuade her peers to back the Brexit withdrawal agreement. Sterling has already this morning fallen around 0.7% versus the Euro. Against the US Dollar we have seen a 0.4% decline.
Parliament is once again in deadlock over Brexit after the Democratic Unionist Party (DUP) critically confirmed that they will reject May’s deal again at the third time of asking. This is weighing heavily on the pound as the exit date of April 12th looms just around the corner, and we need at least some kind of agreement if we want to avoid leaving without a deal on this date.
The US Dollar has risen this morning, seemingly due to safe haven flows. In times of global uncertainty the greenback tends to benefit and with the Reserve Bank of New Zealand’s dovish tone towards future interest rate hikes yesterday, investors moved their money to the safe havens of the Dollar and Yen.
The Euro is struggling at present. The single currency lost half a percent earlier in the week as the 10-year German bond yield fell to a 2 ½ year low. Mario Draghi was also very cautious in his comments yesterday towards future monetary policy, his dovish words did little to help the Euro.