GBP Drops as Tory Loyalist Deals a Blow to PM May

MARKET DEVELOPMENT – GBP DROPS AS TORY LOYALIST DEALS A BLOW TO PM MAY

GBP: The Pound is on the backfoot this morning and losing ground against its major counterparts. GBP buckled early on after Tory loyalist Fallon dealt a blow to PM May, by stating that it may be possible to delay the UK’s departure in order to renegotiate a better Brexit deal. Elsewhere, President Trump added fuel to the fire after noting that it may not be able to trade with the US, adding that it is a good deal for the EU. Consequently, GBP has given up the 1.28 handle to trade in the mid-1.27s, support is situated at 1.2720 before the 1.27 handle.

USD: The US Dollar is slightly firmer, up 0.1%. Commentary from Fed’s Clarida was in stark contrast to his comments a couple of weeks ago, where he signalled caution over growth in 2019. Today’s comments suggested little signs that the Fed would consider pausing rate hikes anytime soon. Clarida stated that gradual policy rate hikes remain appropriate, adding that he would back more rate hikes than expected if inflation surprised to the upside. However, given that inflation expectations have dropped amid

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