Cable falls to a low of 1.2627 on the day
We’re just a couple of pips away from eclipsing yesterday’s low of 1.2624 before establishing fresh four-month lows in the pair again. The pound is coming under pressure against in the European morning as UK political worries continue to mount amid growing calls for Theresa May to resign as soon as possible.
Overnight, we saw the beginnings of a Cabinet mutiny with Andrea Leadsom calling it quits as she says that she cannot present a WAB in parliament that she does not support. Leadsom has been a staunch ally and supporter of May so for her to resign, it does say a lot about the situation we’re experiencing right now.
As of today, more resignations are reportedly set to follow as lawmakers continue to pressure May to resign before the end of the week.
For the pound, as long as May stays in office, the path of less resistance remains for a move lower. I’m not sure who will be announcing the WAB in parliament now that Leadsom is gone but I reckon the details are likely to see May come under further backlash and that doesn’t bode well for the pound outlook as well.
Right now, cable looks to be contending with a break of the 1.2620-30 levels before visiting bids around 1.2600. But in the bigger picture, we very well could be headed towards 1.2500 if May decides to hang on until June.