Much Needed Boost for GBP/USD as May Announces Resignation
The Cable moved positively on Friday as news broke regarding the resignation of British PM Theresa May. The pair closed at a high point for the day of 1.2710. This was a much needed consolidation after a difficult week for the pound. Retail sales figures which were higher than anticipated for April also helped the currency rebound.
April Sales Figures Provide Strong Start
Early trading had the cable already making steady progress for the day, even if it was still trading below the entry point for this week. This came right on the back of better than expected data from UK retail sales figures for the month of April. This number came in at 4.9%, slightly more than the 4.2% which the market had anticipated.
US Goods Order data for April came in lower than expected by a considerable margin. This has been expected at + 2.0%, but actually delivered a negative figure of 2.1% instead. This was bad news for the USD which weakened on the release of the news. Sterling though held strong. A 0.5% boost at the moment of Mays resignation helped to steady the ship.
Resignation News Provides Temporary Relief
Theresa May’s announcement that she will resign her position as party leader and Prime Minister from June 7th, brought some temporary respite to the pound after a very challenging period. May had already faltered on three occasions when trying to get her EU withdrawal proposal through parliament.
This proved to be enough as she announced her departure today. In an emotional speech, she stood by her decision to persevere, and highlighted the need for compromise. Whether her words are heeded or not, her successor will face the same uphill battle to complete a successful European exit. May will remain in office for the state visit of US President Trump on June 3rd. He commented himself today saying, “I feel bad for Theresa. She worked very hard”.
Where Next for GBP and Brexit
Ultimately, the task of getting a Brexit bill through parliament will now fall to Theresa May’s successor. This race is likely to be completed by July. It is an opportunity for many to put their hat into the ring, although it remains to be seen if many are brave enough to take over with the current debacle ongoing.
Andrea Leadsom, who’s resignation earlier this week may well have been the final straw for the PM, is among the leading names expected to be involved. This is alongside leading Brexiteer, Boris Johnson. Many feel that a pro-Brexit candidate is both most likely, and most logical moving forward in the current situation.
The GBP may have experienced its first positive day in quite a while, but major difficulties still lay ahead in the coming weeks for the cable. A boost would be expected depending on who puts themselves into contention, and how the EU responds to these developments. The US too continues to deal with ongoing uncertainty over its relations with China.