Sterling weighed down by Government duplicity
Sterling (GBPUSD) continues to come under pressure as the uncertainty as to how the UK Government is actually planning to carry out their election manifesto promises with regard to the implementation of leaving the European Union. Or more accurately, to what extent they intend to renege on them. Reports leaked to a major UK newspaper reveal that the UK Government is the architect of a suggested a 12 month rolling extension period that could keep the UK tied to the EU indefinitely, particularly if they concede to the EU the right to terminate it only with the agreement of both parties, as seems likely As the calls for a change of leader become louder, Conservative MP’s will start to fear that the consequences of the route being demanded by the Prime Minister will be unemployment for them all. Rather then just getting on with the task at hand, the UK is now faced with the prospect that even now, with Brexit supposedly less than 6 months away, the UK Government doesn’t appear to have taken contingency planning as seriously as it might. Whether this is intentional (possible) or simply incompetence (difficult to rule out), is less clear. This leaves Sterling in an unenviable position, and only the further uncertainty of a leadership challenge can resolve the issue. In the meantime, we’d expect to see only technical rallies, and would look to add to short positions in the event of any technical rebound.