Pound Sterling tumbles after Brexit vote halt

The Pound Sterling has been riding on a roller coaster since Brexit referendum. The currency tumbled to USD1.26 per GBP on 10^th Dec 2018. A renewed pressure on the Pound is visible as the British Prime Minister Theresa May postponed a parliamentary vote on the Brexit deal. The postponement of the parliamentary vote has created uncertainty among investors about deepening political crisis in Britain. Apart from the political uncertainty, macroeconomic factors such as inflation has also played a role in the depreciation of the currency. Inflation rate was 2.2% in Oct. 2018 (Source: ONS), lower than market expectation that also has eased the pressure on Bank of England to raise the interest rates. Moderation in the rate rise expectations dampens short-term foreign fund flows that influences exchange rate.