The pound fell sharply to a three month low on Wednesday, based on growing expectations that Prime Minister Theresa May will fail to get her Brexit deal approved and could soon face a leadership challenge.
Sterling has weakened more than 1% this month as deadlocked cross-party talks expose deep political divisions over how, when and even if Brexit should take place.
May plans to put forward her thrice-rejected Brexit deal in the week beginning June 3, to try to secure an agreement before lawmakers go on summer holiday. However, Labour Party stated it would not ratify the deal if a compromise agreement is not reached with the government.
The euro retraced earlier losses against the U.S. dollar on Wednesday after administration officials said that U.S. President Donald Trump is expected to delay a decision on tariffs on imported cars and parts by up to six months.
A formal announcement is expected by Saturday, the due date for Trump to make a decision on recommendations by the Commerce Department to protect the U.S. auto industry from imports on national security grounds.
Meanwhile, Italy’s Deputy Prime Minister Matteo Salvini criticized European Union rules for the second day. “If there are European rules that are starving a continent, these rules must be changed,” Salvini said on Wednesday, a day after he said the government was ready to breach EU rules that seek to limit budget.
13.30 – USD: Core Retail Sales MoM; Forecast at 0.7% against previous of 1.2%
13.30 – USD: Retail Sales MoM; Forecast at 0.2% against previous of 1.6%