- Brexit: Theresa May Failure to Reach Agreement With EU Plunges Pound
U.K. Prime Minister Theresa May failure to reach an agreement with the European Commission President Jean-Claude Junker on Monday deepened Brexit uncertainties.
The talks which broke down after Arlene Foster, the DUP leader, ruled out any deal “which separates Northern Ireland economically or politically from the rest of the United Kingdom”. Took a surprise turn when Leo Varadkar, the Irish Prime Minister, accused Prime Minister Theresa May of reneging on their agreement to put an end to the border controversy and kick-start negotiation.
According to Leo “The responsibility of any prime minister is to ensure that they can follow through on agreements that they make and we are surprised and disappointed that they haven’t been able to,” he told a Dublin press conference.
Also, Arlene Foster reiterated their position saying “We have been very clear. Northern Ireland must leave the EU on the same terms as the rest of the United Kingdom.”
The inability to reach an agreement plunged the U.K. currency across the board as investors and traders doubt Prime Minister Theresa May have what it takes to reach a successful agreement without further complication.
The pound fell against the US dollar to $1.3388, erasing more than 60% of its last week gain. Hence, if the uncertainty surrounding Brexit persists, the pound may drop as much as 90 pips to $1.3207 support level.
This is because even though construction sector expanded more than projected in November, new investment remained weak, suggesting that investors are holding back due to growing economic and political uncertainty in the region. Therefore, a positive Brexit agreement or meeting is necessary to boost business confidence and sustain economic activities.