Delay in Queens speech continues to weaken the Pound

The Pound has been performing poorly since Britain’s 2017 general election ended with a ‘hung parliament’. Uncertainty and a lack of confidence in UK Prime Minister Theresa May’s ability to govern with a minority has weighed heavily on GBP exchange rates.

The Queen’s speech which was due on Monday 19th June, has now been delayed ‘by a couple of days’, as talks with the DUP get underway, adding more yet uncertaintity to the political situation. This has futher undermined the Pound today.

Big Ben and the Houses of Parliament

Theresa May has been able to remain in power, leading a smaller minority government. However, after her mishap in calling the election to begin with, her opponents and even some Conservative backbenchers have been arguing she won’t hold the premiership role for much longer.

With Britain’s leadership still uncertain and Brexit negotiations now worse off, the Pound has been left unappealing. This week’s data may be overlooked somewhat as political uncertainties remain in focus.

GBP vs the USD

The Pound to US Dollar exchange rate plunged last week as Britain’s general election result shocked traders and jitters surrounding US President Donald Trump lightened slightly.

GBP/USD is unlikely to recover much any time soon either with Britain’s political outlook so filled with uncertainty. US Dollar investors, on the other hand, will surely be looking forward to this week’s upcoming Federal Reserve policy decision.

The Fed is expected to hike US interest rates this week. If the Fed surprises and leaves rates frozen, GBP/USD will rise. The US Dollar could also weaken if the Fed indicates that the outlook for more rate hikes has worsened.

As this intraday chart of the GBP performance against the USD shows, the Pound has shown considerable weakness against the US Dollar today as the political uncertainty continues. At the time of writing, the GBP/USD exchange rate is now trading below the days opening rate, with every indication that futher falls could follow.

GBP vs USD echange rates chart for 12 June 2017

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GBP vs the Euro

The Pound to Euro exchange rate briefly hit its worst levels since November 2016 on Friday in reaction to Britain’s surprising election results. GBP/EUR recovered from its worst levels however, as last week’s European Central Bank (ECB) news weakened the Euro.

GBP/EUR slipped again when markets opened on Monday as investors reacted to news that French President Emmanuel Macron’s party is performing well in French legislative elections.

Macron’s en March! party is projected to take between 415 and 445 seats in the National Assembly next week, bolstering market confidence in the new French Presidency.

The intraday chart of the GBP vs Euro currency exchange rates shows how the Euro is strengthening significantly against the Pound today. The Pound has continued to fall against the Euro and is now significantly below yesterdays closing rate, with further weakness likely.

GBP vs Euro echange rates chart for 12 June 2017

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