The Pound is set for a rollercoaster week on the back of political developments which are about to reach a climax. The House of Lords has successfully managed to vote in favour of a series of amendments that the government must now vote on later this month. UK Prime Minister Theresa May is in a very uncomfortable position in that she does not command a big enough majority in the House of Commons to push through her vision of Brexit. The House of Lords are making things harder for the Prime Minister and it is well known that that there are a large number of individuals in the Lords who seek to keep Britain with as close ties as possible to the EU and effectively keep Britain in the single market. This of course is at loggerheads with the government’s policy of taking Britain out of the customs union.
Theresa May will hold a Brexit cabinet meeting tomorrow to discuss whether Britain should remain in the customs union. There have been noises from Brexit negotiator Oliver Robbins for a custom partnership something that is reportedly supported by the Prime Minister. However finding agreement on this issue from other cabinet ministers will be tricky to achieve. Both ministers Liam Fox and Boris Johnson want to move away from a customs union and so this meeting could give us a lot more clarity as to where Brexit is heading and thus the Pound.
Sterling exchange rates have suffered after the Gross Domestic Product figures released last Friday which saw the numbers fall to a 5 year low at just 0.1% for the first quarter. Some commentators are putting blame not just on the cold weather but also on austerity and Brexit uncertainty although my view is that the economic data will bounce back in the coming months.
For the moment the Pound is facing an uncertain period in the midst of these important Brexit negotiations.