No surprise in May’s reshuffle

9 January, 2018

Ashley Finill

The markets re-opened yesterday for the second trading week of 2018. Monday was a fairly uneventful day of trading among the majors with very few data releases to dictate any movement and as a result the market remained fairly stagnant throughout the day. Yesterday’s attention was mainly focused on Theresa May’s cabinet reshuffle of the conservative party. There were no surprise inclusions or firings among the party and as such did not have any major impact on Sterling. However with the new cabinet now in place Brexit negotiations may move up a gear which is high likely to create volatility in the future as the subject has continued to mar any Sterling gains in the past 18 months and leaving the EU has had drastic consequences for the Pound.

Adding to the ongoing woes of the Pound the Euro may find some form of strength in the coming weeks should Germany’s chancellor Angela Merkel successfully form a coalition with the SPD ( Social democratic party ) Led by Martin Schulz as talks are set to commence this week. It has been over 3 months since the election took place with no progress being made. Germany has one of the strongest economies in the EU and as such will be much welcomed news should a coalition government be formed as this will be very much Euro positive. As we know political uncertainty does not bode well with the currency market and often is the cause for weakness in the respective currency for that region. With Merkel desperate to get talks underway and come to a conclusion an announcement could be imminent. With this in mind should you have a requirement to purchase Euros it may be a good idea to get something in place sooner rather than later to not be caught out by a snap announcement in what is already a fragile period for Sterling.

Today there are a couple of major data releases which are likely to an impact on exchange rates, at 9am in the Eurozone the European Central Bank hold their non-monetary policy meeting and later on at 10am staying in the Eurozone is the unemployment rate which is expected to make a slight contraction to 8.7% from the previous 8.8% seen last month.