Brexit Briefing: Sterling Stable Despite Pressure From Polls, Minister Davis

The British Pound was clinging close to the $1.30 level Monday despite a warning from the UK’s Brexit Minister David Davis that the UK would walk away from the Brexit talks with the EU unless the EU compromises on the €100 billion bill it is demanding from the UK to pay for the divorce.

It also shrugged off a sharp narrowing in the opinion polls for the ruling Conservatives over the opposition Labour Party ahead of the UK General Election on June 8. Four recent polls have shown the lead down to between 9% and 12%, from 20% little more than a week ago.

In early European trading Monday, GBP/USD fell below the psychologically important 1.30 mark but then rallied.

Chart: GBP/USD Five-Minute Timeframe (May 22 Intraday)

Chart by IG

Speaking to The Sunday Times newspaper, Davis said: “We don’t need to just look like we can walk away, we need to be able to walk away… Under the circumstances, if that was necessary, we would be in a position to do it.” As for the polls, the latest show the Conservatives on 43%-46% and Labour on 34%-35% after UK Prime Minister Theresa May made a U-turn on social care by proposing a cap on the amount that the elderly have to pay for care costs –a changed dubbed a “dementia tax” by her opponents.

Euro-Zone finance ministers are due to meet in Brussels today and a meeting of all EU finance ministers will take place tomorrow but aid for Greece will likely top the agenda rather than Brexit.

Markets

Index / Exchange Rate

Change (Exchange Hours/GMT Session Rollover)

Market Close/Last

FTSE 100

+0.41%

7,506

DAX

-0.41%

12,587

GBP/USD

-0.28%