The GBP is reported to be down on Monday on snap election speculation and as with previous news about political turmoil in the Tory government, this appears to be more hype than fact, according to Greg Gibbs, Analyst at Amplifying Global FX Capital.
Key Quotes
“PM May’s government has survived since the July 2017 election, delivering so far on a Brexit ‘Divorce bill’, a transition period, and now there is debate over the Tory position regarding the thorny issue of trade relations and how it could work with the Ireland/Northern Ireland border.”
“The stability of the government is always in question when there are disparate views in the UK parliament. But May represents the balanced view trying to find a working solution to Brexit with the EU Remainers to her left and the Hard Brexiters to her right.”
“There are no clear alternative leaders that could pull the Tories together to take on the Labour opposition. The Hardliners to her right risk losing to Labour and control of parliament if they rebel and force a split in the Tory party. In which case ,a soft Brexit or no Brexit outcome comes into play.”
“The more likely scenario is that Tories move forth led by May and find a way forward to negotiate a deal with the EU. As such, any bouts of weakness in the GBP related to fear of a collapse in government are probably buying opportunities.”
“The GBP is still historically cheap, bearing the scars of the Brexit vote; we view it gradually clawing its way back.”
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