UK Politics Drives Safe Haven Demand
Safe haven demand increased in the wake of the latest news out of Britain which complicates matters for the Prime Minister who is hoping to push through an agreement in Parliament so that the impending Brexit won't be a “hard” one. The latest turmoil is a result of the surprise resignation of Dominic Raab, Britain's Brexit minister. Raab said that he could not support Theresa May's proposal which he believed jeopardized the “integrity” of the U.K. He also said he couldn't get behind what he perceived as indefinite backstop deal which gave the EU too much power over Britain.
As reported at 11:15 am (GMT) in London, the GBP/USD was trading at $1.28, down 1.55% and moving off the session trough of $1.2751; the high was a distant $1.3030. The GBP/JPY was trading lower at 145.266 Japanese Yen, a loss of 1.60%; the pair has ranged from 144.576 Yen to 147.926 Yen. The GBP/CHF was trading lower at 1.2877 Swiss Francs, down 1.52%.
McVey Resignation Follows Raab's
It was also reported that another high-profile resignation was handed in to the UK Prime Minister. In a letter submittjed today, Esther McVey, the UK's Work and Pension Secretary, told Ms. May that she believes the Brexit proposal, as is, does not respect the terms of the original Brexit referendum. With this news, analysts say that Theresa May's leadership as head of the Conservative Party is sure now to be challenged and that it greatly undermines her goals to secure a Brexit deal.