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You are here: Home / British Sterling / Cabinet reshuffle and the effects on the Pound

Cabinet reshuffle and the effects on the Pound

January 8, 2018 by Lewis Edmonds

Cabinet reshuffle and the effects on the Pound

The return of Parliament brought with it an injection of new energy as Theresa May reorganised her Cabinet, effectively strengthening the power of her Conservative party to help relieve some of the pressure currently being applied to the Government by Brexit.

Most of the major players in Theresa May’s government party were left unchanged, Boris Johnson remained as Foreign Secretary, Phillip Hammond is still the Chancellor of the Exchequer, even though interestingly enough he was an avid ‘remain’ supporter, along with Brexit Secretary David Davis and Home Secretary Amber Rudd who will also be keeping their current positions.

Surprisingly, Sterling has actually strengthened following today’s announcement. With little economic data that could really excite investors and move Sterling rates, the Pound started the week weaker against most of its counterparts. On Friday of last week, the Times reported that Britain had experienced its worst year for consumer spending in 5 years, as rising inflation and stagnant wage growth start to squeeze households following uncertainty surrounding Brexit.

With this in mind, investors are likely to focus on domestic politics after today’s Cabinet reshuffle. Brexit has been tipped to be the biggest driver for the Pound’s strength or weakness, depending on how the all-important trade talks pan out.

With this in mind, I would point out that today’s Sterling movement, across the board was taken by investors as a positive reshuffle. The ‘no deal’ outcome on trade talks looks less and less likely as the Government has managed to agree on terms on citizens rights and the Irish Border. As these fears diminish further I would expect the Pound’s value to increase further.

Many analyst are now expecting a recovery for the Pound as the year progresses and clarification of a UK / EU trade deal materialises.

Filed Under: British Sterling Tagged With: Brexit, Brexit negotiations, Cabinet reshuffle, Pound Sterling strength, Theresa May

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About Lewis Edmonds

When he is not offering insights into the what is happening on the currency markets Lewis manages key relationships for an authorised payment institution in the UK.

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