The British pound may be in for a tough week after another one of UK Prime Minister Theresa May’s cabinet ministers resigned which has raised speculation that more will follow and may lead to the collapse of her government.
Jo Johnson, the Brother of his more famous counterpart Boris Johnson has resigned from his cabinet post and called on the Theresa May to hold a 2nd referendum on Brexit because the deal on the table now is woefully inadequate and not what the people voted for.
“The week has passed without further progress on a Brexit deal, and the afternoon has become more interesting as Jo Johnson resigns from the government, calling for a second referendum”. said Chris Beauchamp, chief market analyst at online broker IG.
Even if some sort of deal emerges soon, it will still have to clear parliament, and it is by no means certain that such an outcome will transpire,” he added.
The Biggest risk now is if Prime Minister May is ousted from her post, a general election could be called which would throw the UK and Brexit process into chaos which would be devastating for the British pound and some are already advising to short the currency
“Risk-reward favors short pound,” said Mark Dowding, a money manager at BlueBay, which manages $60 billion.
“We don’t see any deal having an easy passage through the Commons. Ultimately there is a good chance of a general election in the next six months, either before or after Brexit.” He added.
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