The US dollar regains positions benefiting from the events that hit the UK. Specifically, Dominic Raab, Secretary of State for Exiting the EU, has resigned being against the variant of the Brexit deal with the proposed terms. Moreover, Work and Pension Secretary, Esther McVey also quits the Cabinet. In this situation, the vote of unconfidence in the Prime Minister, Theresa May, is getting more and more real. As a result, the sterling bulls have had to step back for now.
The sterling-to-US dollar exchange rate failed to take roost above $1.30, and now the rate plunged to $1.2792. The euro has followed the trend as well. Extra pressure is coming from the fact that the markets no longer include the interest rate increase into the prices citing the political tension escalation.
The UK failed to show any positive economic reports as well. According to the released data, retail sales decreased by 0.5%, though it was expected an increase of 0.2% after losing 0.4% in September. The rate year-on-year was much worse expectations.
Nevertheless, the political drama and Brexit are in the spotlight now. The vote of unconfidence can push sterling down even if the greenback gets no reasons for strengthening. The pair still can drop, but it seems that the rate can hike in the near term after active selloffs.