UK Leadership Challenge Sends Pound Lower

The Pound Sterling moved lower during trade on Wednesday on reports that the Prime Minister's seat is likely to be challenged. The BBC reported that a large number of lawmakers met to talk about plans to oust Theresa May, who is being roundly criticized for her plans to hold Britain as a “trade free zone” once it leaves the EU next year. News that EU negotiators were confident that an agreement could be reached with the British government has been negated by the in-fighting of Theresa May's political party.

As reported at 11:21 am (BST) in London, the GBP/USD was trading within a narrow band at $1.30, up 0.01% and not too far from the session low of $1.2993 while the peak is holding at $1.3048. The EUR/GBP is trading at 0.8899 Pence, down 0.11%, within the range of 0.88881 Pence at the low end and 0.89166 Pence at the high end of the session.

BoE in Focus

Market players are taking their cues from the Brexit-related developments and quickly dismissing even positive economic data. Earlier this week, upbeat GDP data was pushed to the sidelines. One upcoming event that won't easily be dismissed is tomorrow's meeting of the Bank of England's Monetary Policy Committee. While economists polled are forecasting the status quo as regards interest rates, FX markets will want to see if Mark Carney, the BoE Governor, will offer any changes to the existing forecasts. Yesterday, Carney agreed to stay on in his capacity as Governor until 2020, rather than the June 2019 departure originally planned.

Barbara Zigah is a freelance journalist living in Ghana, who specializes in Forex-related content; her online work has appeared in the IB Times, NASDAQ, Benzinga, and Seeking Alpha.