Reports circulated yesterday morning that there were growing numbers of MPs ready to submit letters of no confidence in Theresa May, but despite this, GBP/USD held steady. It was only as she addressed the CBI conference later in the day that GBP/USD shed a quick 70-80 points, albeit she didn’t say anything we hadn’t already heard before.
There turned out to be good support at and just under the big 1.28 figure and it wasn’t long before Cable recovered, helped in part by a softening greenback. The pair has held firm and traded a steady range overnight, despite news that DUP MPs abstained on a series of votes on the Finance Bill yesterday evening, in protest of the current agreement. On one occasion they voted with Labour to cut the government's majority to just five. The DUP have warned Theresa May to "keep her side of the bargain" saying the backstop would result in new regulatory barriers between Northern Ireland and the UK.
It’s another potentially big day for the pound with BoE Governor Carney speaking, along with other MPC members, following the release of the central bank’s inflation report. The threat of a leadership challenge is still looming, too, and herein lies bigger potential for a negative GBP shock.