Monday saw the pound slipping with trouble building up for Theresa May, the Prime Minister of UK. A report stated that forty MPs from the Conservative Party are preparing a leadership summons in the backdrop of the Brexit discussion facing a critical deadline.
On the other hand, the dollar ended up getting a lift in contrast to its peers with American yields on a rise. Even as the British currency stumbled, the key focus of the investors remained a strategic tax overhaul in the U.S. In the most recent report, pound sterling reported a 0.55 percent drop and stood at $1.3120 GBP. It had remained at a high of $1.3229 for nearly eight days.
Conservative party signs no-confidence letter for May
So what exactly caused the pound to experience a sudden drop? According to Kyosuke Suzuki, who works at Societe Generale (Tokyo), the happening could be attributed to some negative headlines for the prime minister that hit the papers on the weekend. This is perhaps why the week kick-started with a drop in the pound.
As per The Sunday Times reports, 40 parliament members from the Conservative Party may have signed a no-confidence letter for the British Prime Minister.
In addition to this, David Davis, Brexit minister, reported that the UK will not provide a formula or a figure for the amount that is owed to the European Union, throwing light on the poor progress haunting the separation discussions.
The U.S. dollar was up 0.5 percent (94.533 .DXY) against a collection of 6 major currencies, tracking a six-basis point increase in long-term American Treasury yields.
Dollar rises up as other currencies fall
Mizuho Securities key forex strategist, Masafumi Yamamoto says that the steep increase in the American Treasure yields isn’t hurting its currency in any way. However, the rise in the yields is actually quite technical and hence the benefit for the dollar stands to be limited.
Masafumi added that the talks on the U.S. tax overhaul are proceeding approximately as per the schedule. The situation as such is working for the nation’s currency.
In other places such as Australia, there was 0.05 percent drop in the dollar as it reached $0.7655 AUD=D4, its three and a half month low. There is quite a bit of pressure on the currency and its yield stock has shrunk to the maximum since 2001. The dollar in New Zealand reported a drop of 0.15 percent too.