GBP/USD renews 4-month low at 1.2720 dragged by UK politics
- Labour Party and the government fail to reach an agreement.
- GBP/USD drops more than 250 pips since Monday.
- US Dollar Index climbs to 98 area on upbeat sentiment data.
For the fifth straight day this week, the British pound came under heavy selling pressure and dropped to its lowest level against the dollar since January 15 at 1.2720. As of writing, the GBP/USD pair was down 0.5% on the day at 1.2730. For the week, the pair is down 270 pips at its current level.
Earlier today, markets reacted to the fact that cross-party talks to come up with a Withdrawal Agreement that will be supported by the majority of the House of Commons in the UK failed. British Prime Minister Theresa May's spokesman told reporters it was clear that they were not going to be able to reach a complete agreement with the opposition Labour party. Similarly, "the government has not moved its position fundamentally," Labour leader Corbyn said and added there was "no deal done at all" with the government.
On the other hand, the upbeat sentiment data from the U.S. provided a boost to the greenback and forced the pair to continue to push lower in the American session.
The University of Michigan's Consumer Sentiment Index rose to its highest level in fifteen years at 102.4 in May (preliminary) from 97.2 in April and beat the analysts' expectation of 97.5. "Consumers viewed prospects for the overall economy much more favorably, with the economic outlook for the near and longer term reaching their highest levels since 2004," the UoM said in its press release. The US Dollar Index, which advanced to a 2-week high of 98 in the session, was last up 0.12% on the day at 97.94.
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
