The British pound is under pressure today as a British Prime Minister Theresa may attempts to strike a deal with the DUP party today in order to form a government, with some saying time is running out.
At 11am (GMT) the British currency was trading at 1.2728 against the US dollar, down from $1.2760 earlier in the trading session.
Depending on the outcome of the deal, the British pound could see a new yearly low if May is unable to attract the support needed as political instability is likely to spook investors.
"The UK’s post-election political uncertainty potentially comes to a head this week, with the parliamentary vote on the Queen’s speech, and therefore May’s ability to form a government, likely coming on Thursday. As the week goes on any signs as to whether or not the Prime Minister will be able to gather the required DUP votes to ensure she stays in power is going to be the main driver of trading for the Pound," noted Connor Campbell, an analyst with Spreadex.
On the other hand, if an agreement is brokered, we may see the pond reach a new yearly high as the market breathes a sigh of relief on the back of political stability which will allow the UK to get back to business as usual,
"Prime Minister Theresa May needs to strike a deal with the Democratic Unionist Party to prevent her government from falling apart” noted FXTM Chief Market Strategist Hussein Sayed
"I believe there’s a high chance that she will get a deal, but if she failed to do so, GBPUSD would likely experience another fall towards 1.25, however, if she were to be successful, l expect to see a further recovery towards 1.29” he added.
The durable goods figure from the US will hit the market in a few hours, which is bound to create some volatility in the pound against its US counterpart with a good figure once again bound to raise speculation about just when the next rate hike from the US Federal Reserve might be.