- Sterling rallied across the board yesterday as PM Theresa May called a snap general election in a surprise move.
- Assuming that MPs approve the snap election today, the UK will be heading to the polling stations on the 8th June.
- PM May’s speech outside number 10 stated the reason for this election was to secure certainty, stability and strong leadership as she prepares to enter departure negotiations with EU officials later this year.
- The Conservative working majority in Parliament is only 17 which gives her a weak hand over political rivals in Britain. An increased majority would strengthen her position against anti-Brexit back-benchers and she is unlikely to find a better time to achieve this with the opposition in a weak position according to the polls.
- Before the snap election was announced, sterling came off half a percent against the dollar as there was uncertainty over what the PM’s surprise announcement would be. Once the announcement was made sterling rallied two cents on the euro and nearly three cents on the dollar.
- GBP/EUR opened the day at 1.1799, rallied to 1.20 before closing up 1.43% at 1.1968. GBP/USD made gains of 2.24% on the day with opening and closing rates of 1.2561 and 1.2843, respectively.
- The most common reason for this sterling strength is that an expected landslide victory for the Conservatives will likely strengthen Theresa May’s hand in the departure negotiations with EU officials as she will not be facing as much resistance from the domestic opposition.
- Elsewhere we had US building permits come in as expected at 1.26M and US industrial production come in at 0.5% as expected.
- Asian equities are generally weaker this morning with Hang Seng down 0.6% and the ASX down 0.5%.
- GBP/NZD currently trading at 1.8265 whereas GBP/AUD is currently trading 1.7071.
- Today we have Eurozone Final CPI y/y due at 10am to be followed by Crude Oil Inventories at 3.30pm and New Zealand CPI q/q this evening at 11.45pm.
|Currency Pair||Interbank Rate||% Change on Day|
|Time (GMT)||Region||Data Release||Forecast||Previous|
|10:00||EUR||Final CPI y/y||1.5%||1.5%|
|15:30||USD||Crude Oil Inventories||-1.0M||-2.2M|