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Pound Slides as May Is Pushed Toward the Exit

Investing.com -- The dollar was higher across the board in early trade in Europe Wednesday, as the reportedly imminent exit of British Prime Minister Theresa May over the Brexit shambles depressed the pound and made for an awkward backdrop to European parliament elections that start today.

At 03:00 AM ET (0700 GMT), the GBP/USD pair was at $1.2605, a new 2019 low, resuming its fall after Andrea Leadsom, the lawmaker tasked with organizing the government’s business in the House of Commons, resigned rather than introduce May’s revised EU Withdrawal Agreement bill. The Times of London reported that many of May's lawmakers expected May now to resign within the next day or two.

The pound was also at a four-month low of 1.1321 against the euro.

“The chances of a change in power in London soon are rising, as are those of a hard Brexit on October 31. Both would be bad for the pound,” said Deutsche Bank (DE:DBKGn) strategist Ulrich Stephan.

The dollar index, which measures the greenback against a basket of six major currencies, was at a new two-year high of 98.13 as the pound slid, although it was also helped by the minutes from the last meeting of the Federal Reserve’s Federal Open Market Committee, which again underlined how far the central bank is from cutting interest rates.

That news also pushed the dollar to fresh highs for the year against the Aussie and kiwi overnight, while the Chinese yuan also slid 0.2% on worsening fears over the trade outlook.

While the European parliament elections are in focus in Europe, the main market news of the day will come from the string of ‘flash’ purchasing managers’ indexes, which will cast light on whether the world’s manufacturers are overcoming the weak start they had to 2019, or whether the trade frictions between the U.S. and China are having longer-term effects. A preliminary PMI for the euro zone is due at 4 AM ET (0800 GMT), along with the German ifo business climate index

The euro was down 0.2% against the dollar at $1.1120,

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