Uncertain Market with Election Looming

2 June, 2017

Ashley Finill

With the election now under a week away we are now entering a very volatile and uncertain market. The sentiment is very much against the pound as investors remain cautious to support Sterling. One of the reasons is likely to be the lead Theresa May has squandered in the past few weeks, the conservatives now seem to have a lead of a few seats as appose to the heavy margin it was at the beginning of her campaign.

As likely as a conservative victory may seem, it is never a given and should the event of a coalition government occur then we can expect further woes for the Pound. Although the weekend fast approaching the campaigning will still be in full swing and with that being said the rates will continue to react. Should the polls suggest an even tighter margin this could send the pound into deeper water and come Monday morning, rates may be worse off.

As for today on the data front, we have important releases coming from the US this afternoon. Firstly in the morning at 9 am is Producer price index, the figure is expected to be 4.5% which would be 0.6% higher than last month, if so then expect Sterling to react negatively to this. At 12.30pm the unemployment rate in the states is to be released, it is expected to remain the same as last month’s reading which was at 4.4% but should this figure change then expect volatility in the GBP/USD & EUR/USD pairings.

Also being announced is the Nonfarm payrolls, it is expected to come in lower at 185k from last month which is a negative for the dollar should this be the case. Lastly and staying in the US trade balance is released at 12.30 which again should be a rate shaker.

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