British Pound Drops as UK Politicians Disagree on Brexit Plans

The British pound moved lower against the US dollar and the euro on Tuesday, as Scotland’s First Minister Nicola Sturgeon and UK Prime Minister Theresa May disputed over the future of the UK in the European Union.

Theresa May is a strong supporter of Brexit. She’s leading her government through the departure negotiations with the European Union as she hopes the UK’s High Court will allow the government to trigger Article 50 without parliamentary approval. May spoke today in support for a transitional period for Brexit that would have terms that are not yet agreed upon with the European Union to guarantee a smooth transition for British businesses.

On the other hand, Nicola Sturgeon said on Monday that Scotland would hold a new independence vote if the United Kingdom left the single market union. Sturgeon is leading a strong opposition in Scotland against leaving the union, which was apparent in the region’s vote for the Brexit referendum on June 23 that was overwhelmingly unfavorable of departing.

Sturgeon’s threat of an independence vote was met on Tuesday by negligence from Theresa May. May answered questions raised by Members of Parliament on the Liaison Committee regarding the possible independence vote by saying that even if Scotland became independent, it would still lose access to the European single market. If true, then an independence vote would not serve Sturgeon’s goal of remaining in the European Union.

The political uncertainty drove currency traders away from the British pound, especially as trading thinned ahead of the holiday season. Meanwhile, the US dollar gained more strength following a speech by Federal Reserve Chair Janet Yellen at the University of Baltimore’s commencement. Yellen said that the job market is at its strongest level in almost a decade, with the unemployment rate at 4.6% and job wages growing at a moderate rate.

EUR/GBP traded at 0.8398 as of 20:05 GMT on Tuesday, after reaching 0.8420 at 15:10 GMT, the pair’s highest level for the day. EUR/GBP opened trading at 0.8389 today. GBP/USD was at 1.2368, after touching 1.2318 at 14:25 GMT, the pair’s lowest level since November 18. EUR/GBP started the day at 1.2397 today.

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