Cross-party talks – Will they find an agreement?
7 May, 2019
Following the bank holiday weekend, Sterling has reached a new monthly high and gaining almost a percent since this time last week against its majors. Regular readers and rate watchers would have noticed that the Pound has been highly range-bound over the last few weeks so the uplift on Friday afternoon provided a great opportunity for those who were looking to exchange their funds ahead of the long weekend.
The Pounds gains came after results of the local elections saw a substantial defeat for the Conservative party, and a loss for the Labour Party too, signs that the handling of Brexit so far has not been well received. The results have placed increased pressure on the two sides to agree on a deal in their cross-party talks, and with this week being set as the deadline for the pair to agree on a deal, it’s expected that the markets remain at the government’s whim as investors and traders await any news.
Although talk of a cross-party agreement sounds Sterling positive as it means a better chance of a deal being voted through by MP’s, it’s worth remembering that risk of no deal being stuck and the Prime Ministers resignation is still substantial. Yesterday evening the Telegraph reported that Tory bank benchers will ‘move to oust her’ as PM if she agrees to Labours term of a post-Brexit customs union with the EU. (https://www.telegraph.co.uk/politics/2019/05/06/tory-mps-will-move-oust-theresa-may-week-agrees-brexit-deal/) potential for further political uncertainty is still on the cards which are likely to force a weaker Pound.
The week ahead is fairly busy, although little out today aside from a few speeches by Bank of England and Fed members, and Canada releases Ivey Purchasing Managers Index. On Wednesday early morning, New Zealand post their interest rate decision and statement, further speeches by BoE members and the ECB’s president Draghi speaks at lunchtime. Thursday we see trade balance and jobless claims for the US and we close off the week with UK GDP, industrial and Manufacturing productions figures, and Trade Balance, as well as US Consumer Price Index, and Canadas Unemployment Rate.
With lots of events ahead which could move the currency, stay in touch with us at CI and speak to one of our currency consultants to be kept up to date and ask us about the different options we provide to help you mitigate your risk and secure your currency requirements.