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- August 15, 2019
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The pound edged higher after inflation picked up in July, but the currency held within sight of a two-and-a-half year low as brewing concerns about a no-deal Brexit weighed on investor sentiment.
The consumer price index rose 2.1% year-on-year in July from 2% in June, above a Reuters poll forecast of a 1.9% increase. The Bank of England’s inflation target is 2%.
Higher inflation would normally translate into higher interest rates, and therefore a stronger currency. But with the potential for a no-deal Brexit rising as the Oct. 31 deadline approaches, the central bank is likely to remain in a wait-and-see mode until there is clarity, analysts say.
Britain’s opposition Labour Party began its bid to bring down Prime Minister Boris Johnson with a vote of no confidence this morning, urging lawmakers to unite behind a caretaker government led by Jeremy Corbyn to prevent a no-deal Brexit.
In a letter to opposition party leaders and several senior Conservatives opposed to a disorderly exit, Corbyn said his “strictly time-limited temporary government” would delay Brexit and hold a general election.
He said Labour would campaign in the election to hold a second referendum on the Brexit terms, including an option as to whether the country should remain in the bloc three years after it voted to leave.
Johnson, who led the 2016 campaign to leave the EU, has staked his premiership on getting Britain out by Oct. 31, prompting politicians from all sides to try to stop him.
On Wednesday he said those trying to block Brexit were engaged in “a terrible kind of collaboration,” with Brussels after former finance minister Philip Hammond said parliament would block a no-deal exit, and the government must respect it.
Were Johnson’s government to lose a no-confidence vote, lawmakers would have a 14-day period to try to form a new administration; otherwise a general election would be called, which could be held after the Oct. 31 exit date.
Jo Swinson, the new leader of the pro-EU Liberal Democrat party which has 14 lawmakers in the 650-seat parliament, described the proposal as “nonsense.”
Swinson announced late on Wednesday that Sarah Wollaston, a former Conservative lawmaker, had joined the Liberal Democrats. Wollaston suggested a more centrist politician from either Labour or the Conservatives, such as veteran Ken Clarke, could command a majority to navigate the country through Brexit.
Ian Blackford, the Westminster leader of the Scottish National Party with 35 seats, said he was open to discussing ways to block a no-deal Brexit.