May’s successor adds to sterling uncertainty

GBP - British Pound

UK PM Theresa May met with the Tory back bench 1922 Committee yesterday and agreed to set out a time-table for her departure once legislation for her planned withdrawal agreement has been voted on in parliament next month. It seems the ever resilient May has finally bowed to internal pressure within her party and GBP/USD is looking to break below key support set by mid February's low around the 1.2770 handle on the news. With May set to leave whether her plan gets through or not it looks like the pound will be depressed by uncertainty over her successor with no candidate having a clear lead in polls. As sure as day follow night, Boris Johnson has already stated he will be standing for the post with other candidates likely to include Home Secretary, Sajid Javid; Environment Secretary, Michael Gove and former Brexit Secretary, Dominic Raab all likely to throw their hats in the ring. Amidst the uncertainty, what is certain is that the pound will be not be going anywhere north fast until this ongoing drama is brought to an end, which if is a no-deal Brexit, will mean it will head south, very fast. GBP/USD is at at 1.2880 and GBP/EUR at 1.1435, a 350 drop over the past 10 days!

Key Movers

US/China continues to dominate the headlines with reports that reports of face to face talks between US President Donald Trump and Chinese counterpart Xi Jinping at the G20 summit at the end of June in Osaka are not scheduled, despite earlier reports to the contrary. There is still plenty of time to find common ground ahead of the get-together however it seems for the time being things have ground to a halt and the usual safe havens such as the yen are being sought with USD/JPY hanging around the 109.7 handle. One piece of good news are reports from the Peoples Bank of China that they will not let the USD/CNY rate go above 7.0 and that is what probably means equity markets around the world are mixed rather than lower this morning.

EUR/USD is back under 1.12 today despite the good news from Trump on delaying a decision on European tariffs for six months. The news of the delay briefly saw the euro rise however the rally was short lived and the fears the ongoing impasse will cause the EZ weigh heavily in it and other risk assets.

The antipodeans are continuing to suffer with AUD/USD now under .68 and NZD/USD looking like it could slip below .65 before too long.

Expected Ranges

GBP/USD: 1.27 - 1.2840 ▼

GBP/EUR: 1.1380 - 1.1520 ▼

GBP/AUD: 1.85 - 1.8665 ▲

GBP/NZD: 1.9490 - 1.9670 ▲

GBP/CAD: 1.7170 - 1.7340 ▲
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