GBP/USD has edged lower in the Monday session. In North American trade, the pair is trading at 1.2844, up 0.11% on the day. On the release front, British Rightmove HPI posted a sharp decline of -1.7%. In the U.S., there are no major events on the schedule. On Tuesday, the U.S. releases building permits and housing starts.
Brexit jitters hit full force on Thursday, and the pound responded with sharp losses. The currency plunged 1.65% on Thursday after Brexit Secretary Dominic Raab resigned in protest of the draft Brexit agreement between the U.K and the European Union. It promises to be an uphill battle for May, as many Conservative MPs are against the agreement, particularly over the proposed customs agreement with the EU. On Thursday, there were calls from some Conservative MPs for a no-confidence vote against May, and it’s unclear if May will survive the latest crisis. With Labor vowing to shoot down the agreement, May will have a tough time getting a majority in parliament for the agreement. The EU announced that a special summit on Brexit on November 25, but the markets remained concerned that a ‘no-deal’ scenario is a real possibility. GBP/USD posted its sharpest one-day loss of 2018 on Thursday, and further tensions over Brexit could push the pound lower.
Overshadowed by the political drama in Westminster was a dismal reading from British retail sales on Thursday. The indicator came in at -0.5%, its second straight decline. Consumers are nervous about Brexit and are holding tighter to their purse strings. As well, the mild autumn weather has put a damper on sales of winter clothes. The dismal retail sales release could dampen consumer and investor confidence, which could push the wobbly pound even lower.
