Bitter fighting in the UK’s Parliament over a proposed Brexit deal is dragging on European markets and keeping the Euro and the US Dollar in a holding pattern. According to a report from Reuters, markets across Europe are responding poorly to the uncertainty coming from Westminster, and exchanges in the UK, France, and Germany were all treading water to stay afloat. The situation was made worse still after the resignation of several ministers, most notably Dominic Raab, the country’s “Brexit minister”.
The British pound sterling is also feeling the heat from the political ambiguity. Reuters reports that the pound plummeted to levels not seen in nearly two years after the resignations on Thursday. The currency made a minor climb on Friday, but many investors are looking to the yen as a more reliable alternative.
“As long as no deal remains as likely as it is, there is a risk of a sterling depreciation spiral that is self-intensifying,” said Commerzbank Frankfurt’s FX strategist Ulrich Leuchtmannan during an interview with Reuters.
Some in British Parliament believe that the Brexit deal negotiated by Prime Minister Teresa May offers the country its best hope of making a clean split from the European Union; however, several critics have taken issue with the plan and have called for a no-confidence vote to remove her. May has long been embattled by Brexit after the country voted to split from the EU in 2016. Now, some members of her own conservative party are fed up with her performance and are looking for a replacement, according to a report from Reuters.
“What’s happened is people have been ringing me and telling me that they are putting their letters in … and I think we’re probably not far off,” said conservative Member of Parliament Steve Baker, referring to the 48 MPs who must submit letters calling for the no-confidence vote in order to trigger a referendum. “I think it probably is imminent, yes.”
While Europe struggles to cope with the Brexit crisis, markets across the Atlantic in the United States are still wary of what an uncontrolled Brexit would mean for the economy. According to a report from Market Watch, the US markets sunk for days after the original Brexit vote in 2016, and some investors are worried that a “no-deal” Brexit will have broader repercussions. This uncertainty in Europe is also coming at a time when US markets are relatively sensitive to outside influence; however, experts are advising investors that Brexit triggering an economic meltdown is highly unlikely.
If you enjoyed this article, please consider supporting our Veteran Editorial by becoming a SOFREP subscriber. Click here to get 3 months of full ad-free access for only $1