- Sterling lost ground to the euro and US dollar on Friday morning off the back of the election result in which the Conservatives lost their majority.
- GBP/EUR traded as low as 1.1288 and GBP/USD as low as 1.2635 before recovering to some extent throughout the day to close at 1.1377 and 1.2741, respectively.
- Sterling pushed back up from the lows as it became clear that Theresa May would look to form a government with the DUP and some of the uncertainty was removed from the situation.
- Talks between the Conservatives and DUP are still ongoing with a DUP spokesperson telling the media that talks to form a stable government have been ‘positive’.
- UK manufacturing production m/m came in weaker than expected at 0.2% vs 0.8% expected but the good trade balance did come in better than expected at -10.4B vs -12.0B expected.
- Overnight we saw one figure from Australia with company operating profits q/q coming in much stronger than expected at 6.0% vs 5.1%.
- GBP/AUD is currently trading at 1.6902 and GBP/NZD at 1.7713.
- We have a quiet day in store with no data of note.
- Any news that comes to light from the negotiations between the Conservatives and DUP will likely have an impact on sterling with most of the focus being on what the DUP will require from the Conservatives to establish a working relationship.
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