- Theresa May faces a tough week as some members of her party are furious after the elections
- A coalition with the DUP has not yet been finalized
- GBPUSD could slide towards 1.2550 amid political during a very eventful week in the UK
The British pound has stabilized after a crash on Thursday night following a loss of majority for the Tories in the snap elections but could be under more pressure this week as the data and the BoE meeting are clouded by the political landscape.
Let us recall that PM Theresa May called snap elections in order to extend the majority so she did not need to worry about dissidents in her party when agreeing every detail during Brexit negotiations. With the Tories now not being able to assemble a majority government she does not only need Brexit hardliners from her own party but a costly support of the Irish DUP.
“Theresa May is a dead women walking, it’s just how long she’s going to remains on death row” – these are the words of ex chancellor of the exchequer George Osborne, whom May fired last year. For that reason he might not be totally objective but his words still underscore difficulties May’s going to face. She had to backtrack on the assurance that a coalition deal with the Irish Democratic Unionist Party was struck after some details still needed to be worked out and May will meet the DUP leader on Tuesday. Despite a vocal support from her cabinet members, including Boris Johnson, May is bound to face furious complaints from her party members during the cabinet meeting on Monday. A promotion of Michael Gove, who unsuccessfully ran against her for the party leadership last year, is being treated as a sign of weakness.
It needs to be reminded that GBPUSD still trades above levels present before election announcement from 18 April so more downside could be in store if those political concerns linger. Therefore a move towards 1.2550 could be in store for this pair.
GBPUSD could be en route to 1.2550. Source: xStation5
Let us recall that this is going to a calendar-heavy weak for the GBP. As mentioned in a week’s preview, we will face CPI inflation data release (Tuesday, 9:30 am BST), labour market data (Wednesday, 9:30 am BST), retail sales report (Thursday, 9:30 am BST) and last but not least Bank of England decision and minutes (Thursday, 12:00 pm BST).