House of Commons vote in support of Queens Speech

Thursday’s trading was particularly flat throughout the UK session as traders awaited the much anticipated votes in the House of Commons on last week’s Queen Speech. The morning session saw a few minor UK data releases that had little effect on exchange rates but did at least provide some rare upside positivity. Net lending to individuals increased from £4.4Bn in April to £5.3Bn in May, and at the same time Consumer Credit also increased to £1.73Bn from £1.4Bn the previous month. Elsewhere in the Euro-zone a host of confidence and sentiment surveys showed a further boost in particular for Services and Industrial sectors as the Euro-zone economic recovery continues to show strengthen.

As the afternoon session began, US Gross Domestic Product was the headline release with actual figures providing a mixed result. Q1 growth is now confirmed at 1.9%, revised down from 2.2% but the annual growth was revised up to 1.4% from 1.2% which subsequently saw little change in USD exchange rates.

Throughout the afternoon and into the evening, the house of commons continued to vote on amendments proposed by Labour. The house had already voted down a proposed removal of the pay cap for UK public services such as NHS staff, firefighters and policemen as well as a proposal to increase the minimum wage to £10 per hour by 2020, all be it by a relatively small margin. There was however a much bigger margin voting down an amendment for assuring access to the single market during the Brexit negotiations, perhaps understandably as this approach could be seen to weaken the governments hand in this process.

The final vote on the main motion of the Queens Speech was announced at 5:45pm last night and the new Conservative and DUP government was voted up by a majority of just 14 with 323 to the Ayes and 309 to the Noes. This now confirms the governments legislation for the next 2 years as per the Queens Speech but surprisingly has seen a very muted reaction on the market thus far. Sterling had already made good gains on Wednesday and now battles key resistance levels against both the Euro and USD, sitting at the best buying levels currently for the last couple of weeks. Whilst this result should provide some better stability for the pound, any positive news comes against a background of negative sentiment and negative trends, particularly against the Euro, so any potential gains will likely be limited and gradual.

The day ahead sees one final data release for the UK for this month, with the final revision of Q1 growth figures announced at 9:30am, with growth currently at 0.2% from January to March. Euro-zone inflation figures will follow at 10am.