Sterling Drops After UK Supreme Court Rules PM May Must Seek Parliamentary Approval
In another twist in the saga around Brexit, the U.K. Supreme Court has ruled that Theresa May must receive Parliamentary approval before triggering Article 50 in order to begin negotiations to split from the European Union. This ruling can significantly complicate an already complicated process, and this ruling can, in essence, delay the process of triggering Article 50. The net-impact is an inclusion of additional uncertainty in a situation that was already pretty uncertain.
The timing of such a decision comes just a week after PM May had offered up initial ideas as to what the priorities of her strategy would be; and this had finally helped drive some life into the British Pound after a very long month of bearish price action that showed up after the Federal Reserve’s December rate hike.
The big question now is how much of an impact follow-thru price action may carry with such a driver. The British Pound had a rough summer after the Brexit referendum created periods where there was simply no demand for the currency; seeing major drops in June and again in October. Ahead of last week’s open, the British Pound gapped-lower before finally finding some element of support ahead of Theresa May’s Brexit speech prodded GBP-higher. But now that we have another bearish connotation for GBP and yet another series of question marks around Brexit, are bulls going to stay in as support or recede until more clarity is had?
Chart prepared by James Stanley
Political Drivers across the Dollar
Also on the morning of Theresa May’s Brexit speech last week, we had commentary from President Trump delivered in an interview in which he had spoken against the ‘Strong Dollar Policy.’ And while this helped to elicit some weakness in the Greenback, those comments were put-in-scope by the nominee for Treasury Secretary, Steven Mnuchin, when he said that President Trump’s comments were largely focused on short-term observations rather than ‘big picture strategy’.
