It was a miserable day for sterling yesterday as chaos enveloped the Conservative party on the back of PM Theresa May’s EU withdrawal proposal being approved by cabinet. With a major hurdle overcome GBP/USD managed to get back above 1.30 during the Asian session, however it soon collapsed as a series of resignations hit the Conservative party. The departure of Work and Pensions Secretary, Esther McVey started the move lower. However it was the exit of Brexit Secretary, Dominic Raab that really hit pound crosses. Despite helping draft the proposal, Raab felt the plan would threaten the integrity of the United Kingdom and could lead to the UK being tied into EU rules well after it leaves the bloc. Arch Brexiteer MP, Jacob Rees-Mogg then added fuel to the fire by calling for a vote of no confidence in Theresa May. Later in the day, May held a press conference where she defiantly stood by her plan amid rumours that she may have announced she was quitting.
Around the time of the press conference GBP/USD bottomed out around 1.2725, however it has since pulled back to 1.2790. The pound is currently a prisoner of politics with all moves driven by events from Whitehall and Brussels. Should we see Michael Gove resign today, and reports be confirmed that 48 signatures have been presented to the Tory backbench 1922 Committee calling for May to resign, then another leg lower could be on the cards.