23.05.201901:13 Forex Analysis & Reviews: May will resign this weekend

The dollar went up before the "minutes" of the Fed. However, today's release, despite its significance, is likely to have a limited impact on the market. The US currency's growth is primarily due to the weak pound. The demand for the dollar is spurred by reports of new threats by the White House against Chinese technology companies.

GBP issues

The pound plunged to a new four-month low at 1.2641, since the latest version of Theresa May's plan to withdraw from the European Union was also a failure. The prime minister is almost completely deprived of support. May's position is not shared by either the opposition or her own party. A similar protest statement was received from the first minister of Scotland and the head of the Scottish National Party, Nicola Sturgeon. Traders saw this as a growing risk of a disorderly Brexit.

"The responses of Tory, Labor and Eurosceptics were rather negative, and the new deal is unlikely to go through Parliament. The situation may change depending on the results of the Parliamentary elections in the EU, but it can also mean that May will resign over the weekend. Such a scenario was expected by the market, but yesterday it became more distinct," currency analysts wrote.

Note that the elections to the European Parliament should be held from Thursday to Sunday. Nigel Faraj, a supporter of Brexit, has a good chance of winning.

Opinions of leading Brexit strategists

If in mid-March, banks surveyed by Reuters, saw a decreasing chance of Britain leaving the EU without a deal, now the situation has changed. This week, JPMorgan raised the probability of Brexit without a deal to 25% from 15%. Nordea estimates the probability of a "hard" exit at 15% versus 10% in March. The most pessimistic forecast was given by Mizuho strategists, estimating the chances of the chaotic "divorce" process at 50%. In addition, they warned of a possible precipitous fall in the GBP/USD pair before and after the elections in the EU.

The remaining experts mainly adhered to previous forecasts, which ranged from 15-20%. The JPM reported that they were waiting for the Parliamentary elections and the postponement of Brexit until the end of the year. Broad market positioning on sterling suggests that the British currency is waiting for a storm.