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Pound Higher After U.K. PM May Announces Departure On Brexit Gridlock


The pound spiked higher against its major counterparts in the European session on Friday, after U.K. Prime Minister Theresa May announced that she would step down from her post following the failure to get Brexit deal passed through Parliament that is deadlocked with infighting within Conservative party.

In a statement, May said she would quit as leader of the Conservative Party on June 7.

May's announcement came after meeting with Graham Brady, the Chairman of the Tories' backbench 1922 Committee, who has put pressure to step down amid disagreements on her handling of Brexit.

The PM said she did her best to get her Withdrawal Agreement passed through Parliament but that had failed. May's new compromise Brexit plan, which includes a possible second referendum, had angered Tory backbenchers and many of her own cabinet.

May said she will continue to serve as PM until the Tories choose a new leader.

Former Foreign Secretary Boris Johnson appears to be the favorite to win the leadership race, who may handle Brexit in a harder direction.

Data from the Office for National Statistics showed that U.K. retail sales remained flat in April.

Retail sales volume remained unchanged on month, after rising 1.2 percent in March. Nonetheless, sales were forecast to drop 0.3 percent.

Sales excluding auto fuel, dropped 0.2 percent, in contrast to March's 1.4 percent increase. Economists had forecast a 0.5 percent fall.

On a year-on-year basis, retail sales including auto fuel, increased 5.2 percent after expanding 6.7 percent a month ago. This was also bigger than the forecast of 4.5 percent.

The currency has been trading modestly higher against its key counterparts in the Asian session, barring the euro.

The pound appreciated 0.7 percent to a 2-day high of 1.2718 against the greenback, from a low of 1.2647 hit at 5:00 pm ET. The pair was valued at 1.2657 when it ended deals on Thursday. If the pound continues its uptrend, 1.29 is possibly seen as its next resistance level.

The pound was 0.4 percent higher at 0.8803 against the euro, following a session's decline to 0.8838 at 3:15 am ET. At Thursday's close, the pair was quoted at 0.8833. Next likely resistance for the pound is seen around the 0.86 mark.

The pound, having declined to 138.61 against the yen at 6:45 pm ET, bounced off 0.6 percent to 139.49. The pound-yen pair had finished yesterday's trading session at 138.73. The pound is likely to test resistance around the 145.00 area, if it rallies again.

Data from the Ministry of Economy, Trade and Industry showed that Japan's all industry activity fell further in March.

The all industry activity index declined 0.4 percent month-on-month in March, following a 0.2 percent drop in February. Economists had forecast a monthly fall of 0.2 percent.

After dropping to near a 4-month low of 1.2679 against the Swiss currency at 3:45 am ET, the pound rebounded, reaching as high as 1.2752. The pound was trading at 1.2696 per franc at yesterday's close. Further strength is likely to lead the pound to a resistance around the 1.28 level.

Looking ahead, the U.S. durable goods orders for April are scheduled for release at 10:00 am ET.

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