Though it avoided immediately spiralling, sterling was nevertheless under pressure on Wednesday as Sir Graham Brady announced that the 1922 Committee finally has the required number of letters to trigger a vote of no confidence in Theresa May.
The pound was already in a sorry state before all this, shedding its initial Tuesday rebound – and then some – after the Prime Minister was repeatedly rebuffed when trying to reopen negotiations with a sample of EU leaders, including an intransigent Angela Merkel.
Now the currency has the added headache of Wednesday evening’s no confidence vote, one that could still bring about the resignation of May even if she secures a majority, dependant on how close the final result actually is. If she does win, however, and decides to remain in power, then there can’t be another vote for 12 months, lending a certain amount of (confidence and respect-eroded) stability to the PM.
It is perhaps this latter prospect that prevented the pound from tanking on Wednesday. In fact, after a brief dip lower it actually rose 0.1% against both the dollar and the euro, striving to lift off its recent 20 month and 15 week lows respectively.
Elsewhere the European indices couldn’t really build on the trade optimism that drove the Asian markets higher, likely because those gains were spurred on by the same China autos-tariff news that lifted the FTSE et al. on Tuesday.
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved.