Home Daily Commentaries May suffers record defeat ahead of no confidence vote.

May suffers record defeat ahead of no confidence vote.

Daily Currency Update

It was a tumultuous day in Westminster yesterday as Prime Minister, Theresa Mays Brexit withdrawal plan was put to the sword by MPs in a much anticipated, once delayed vote in the House of Commons. Defeat for the bill was pretty much guaranteed however the margin of defeat was believed to be what would have biggest impact on sterling crosses. In the end Theresa Mays motion was crushed 432-202 the heaviest defeat in government history surpassing Labour minority leader, Ramsay MacDonald’s 1924, 166 vote loss. Pessimistic estimates saw a loss of 200 as possible however the 230 shown was far bigger than anyone had expected. In a brief statement afterwards May promised to press on trying to find a solution to the impasse and said she would be looking to members of all political parties for their input. Shortly after this olive branch was extended Labour leader, Jeremy Corbyn confirmed what most were expecting and tabled a motion of no-confidence in the government meaning we are set for another day of high drama tonight when this is voted on. Despite many Tory back benchers disliking Mays Brexit plan they dislike the Labour leader far more so the PM is widely expected to survive this challenge, especially as the DUP which props up the government has already pledged to support May. GBP/USD had been falling throughout the day and hit an intraday low of 1.2670 as the result was announced however quickly rebounded pushing back up through 1.28 within half an hour. The rationale behind what could be seen as a counter intuitive move is that the chances of a no deal exit has diminished with a softer Brexit or even no Brexit at all now more likely. Should the PM survive tonight’s vote then further negotiations with the EU are expected before another plan is presented and voted on Monday. GBP/USD currently trades at 1.2880.

Key Movers

In the States inflationary pressures are easing as the latest Producer Price Index reading slipped deeper into negative territory than forecast. Wholesale goods and services were shown to decrease in price -0.2% for December further than the -0.1% slip predicted. Monthly CPI turned negative for the first time since April last month adding to the argument that we will likely not see any rate hikes from the Fed until the second half of 2019 if at all. USD/JPY remains range bound at 108.55 with EUR/USD at 1.1420.


Brexit aside the main talking point from the Eurozone yesterday were comments from European Central Bank chief, Mario Draghi that the bloc was not heading for a recession however its current slowdown was here for the time being. The ongoing trade tensions between the US and China have rippled around the world with waning demand from the world’s second biggest economy hitting European exporters. There is little data for the rest of the week so Brexit news will likely dominate the headlines across the channel. GBP/EUR has risen to 1.1270.


AUD/USD continues to trade in its narrow range of .7170 to .7235 seen for the past week. Some fresh developments re: the US/China trade dispute are likely needed to push the Aussie higher or lower with little concrete news coming from the recent talks between the two countries. GBP/AUD sits at 1.7890.


Brent crude has risen from $59pb to $61pb over the past 36 hours, primarily on the back of Chinas announcement earlier in the week it was allowing banks to free up cash to lend by lowering its reserve ratio requirement. This move has helped stabiles USD/CAD which like AUD/USD continues to trade in a narrow range. USD/CAD sits at 1.3255 with GBP/CAD at 1.7060.


Like the other commodity currencies the kiwi is little moved this week with only external factors likely to move the local dollar on the back of a quiet domestic docket this week. GBP/NZD is at 1.8935.

Expected Ranges

  • GBP/USD: 1.2790 - 1.2950 ▼
  • GBP/EUR: 1.1205 - 1.1355 ▲
  • GBP/AUD: 1.7820 - 1.8005 ▲
  • GBP/CAD: 1.6980 - 1.7145 ▼
  • GBP/NZD: 1.8825 - 1.8990 ▲