GBPUSD exchange rate remained muted and the pairing is currently trading at an inter-bank rate of $1.2675. On Tuesday, Conservative leadership candidate Jeremy Hunt warned that the party would be committing ‘political suicide’ if it tries to push through a no-deal Brexit. Speaking to BBC Radio 4’s Today program , Hunt stated that a no-deal would result in a general election which could see the Conservatives lose power.

Jeremy Hunt stated:
‘I’m worried that if we don’t solve it [Brexit], we will face a political crisis that is far bigger actually than our legal relationship with the EU, it could lead to the destruction of our party system and the end of my own party.’

The pound has started the week with losses, erasing the gains seen on Friday. Currently, GBP/USD is trading at 1.2671, down 0.33% on the day. On the release front, markets are closed in both the U.S and U.K. for public holidays. On Tuesday, the U.S. releases CB Consumer Confidence. Investors are looking ahead to later in the week, as the U.S. releases first-quarter GDP on Thursday.

Elections to the European Parliament showed a dramatic surge in support for far-right parties across Europe, and the U.K. Brexit party was one of the day’s big winners. The party won 29 seats, compared to 10 for Labour and just 4 for the Conservatives. A chastised Prime Minister May tweeted that it “was a very disappointing night for the Conservatives”. The election results were a resounding backlash against the mainstream parties for their handling of Brexit, which has dragged on past the original deadline, with no solution in sight. For investors, the worst-case scenario is a no-deal exit, which could undermine the economy and send the British pound sharply lower. Unless May can pull a Brexit rabbit out of her hat, it will be up to her replacement, as yet unknown, to try and hammer out a withdrawal deal with Brussels.
Meanwhile, another leadership contender Esther McVey stated it would be ‘political suicide’ not leaving the EU on 31 October.