Good morning,

Sterling hangs in the balance

Sterling’s drop to monthly lows late yesterday came on the back of YouGov’s latest survey which, in conjunction with the Times, forecasts a Hung parliament when the polls close in just 8 days’ time. The projections put the Tories 16 seats short of winning a majority, leaving the UK facing a hung parliament or some sort of Frankenstein coalition composed of Labour, the SNP and the Liberal Democrats. Nonetheless, the poll should come with a major health warning. Pollsters don’t usually project constituencies seat-by-seat and there’s a reason why; the margin of error leaves the likelihood of this poll coming true particularly small. As such, sterling’s losses have been relatively limited, with some of the downside in the pound more likely due to triggered orders and thin liquidity in early Asian trading.

ECB’s flip flop counters euro weakness

Despite the drubbing that the euro took earlier this week, the European Central Bank clearly deemed it’d fallen far enough as source reports yesterday suggested that the bank would directly discuss dropping their commitment to further monetary stimulus should it be required. While this doesn’t necessarily run counter to what President Draghi stated earlier this week, it certainly suggests that the board isn’t unanimous in its willingness to continue to bend and distort markets with incredibly low interest rates. The euro’s recovery back above 1.1150 against the US dollar still holds despite Germany’s inflation numbers proving softer than expected.

Not all trade is created equal

Reports and missives of the weekend’s G7 leaders meeting were less than favourable for future cooperation and borderless solutions to global problems. Spats over both climate change and collective defence have been cited as evidence that the ‘all for one and one for all’ mentality of the G7 could be a thing of the past. To make matters worse, neither the German Chancellor’s critical speech on the issue nor President Trump’s divisive tweets will help the group surmount their differences in the near term. While we don’t expect any drastic repercussions to emerge as a result of the clearly tense meeting, it certainly won’t help progress.

The day ahead

Today’s European session should remain political, not economic, but UK consumer credit will be eyed at 0930BST for signs that the consumer is loading up on personal debt which, while good for the retail sector, isn’t healthy for long-term consumption dynamics.

Our webinar on the election is today and we will be taking a look at the likely electoral outcomes and their impact on the pound, Brexit and your international business. You can register here and a recording will be made available for those unable to make it.

Have a great day.

To the comments, Author: Edward Hardy e64c42cdda509545a9ee0aefaca45a8f (74.125.76.35) To the comments, Author: Edward Hardy

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