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Pound Holds On to Gains as MPs Vote to Hold Snap Election

Categories: AUD, CAD, EUR, GBP, Markets, News, NZD, USD

Sterling



GBP/USD 1 Week Chart

The Pound (GBP) remained close to multi-month highs against the other majors this morning following the vote by the House of Commons to back Prime Minister Theresa May’s call for an early general election.

Investors remain confident that the election will lead to a greater majority for the Conservatives, granting May a mandate to pursue her plans for Brexit and strengthening her position in negotiations with the EU.

Bank of England Governor Mark Carney is scheduled to speak in Washington later today to discuss international economic issues, while Sterling should be largely unaffected by the speech, should he touch on his dovish outlook for the UK economy ahead of Brexit the Pound could waver.

Euro

The Pound Euro (EUR) exchange rate slipped around half a cent from its best levels yesterday as recent polls suggested independent candidate Emmanuel Macron will win the French election.

Pollster Harris Interactive suggests that Macron is currently polling at around 25%, giving him a slight edge over his main rival Marine Le Pen at 22% and a clear lead over Francois Fillon and Jean-Luc Melenchon who are both at 19%.

The single currency may also push higher again this afternoon if the latest Eurozone Consumer Confidence flash rises from -5 to -4.8 as predicted.

US Dollar

After sliding around half a cent overnight, Sterling recouped its losses against the US Dollar (USD) this morning as markets remained concerned over the performance of the Trump administration.

Investors are worried that the recent focus on foreign policy amidst a rise in geopolitical tensions could overshadow Trump’s promise of stimulus spending and tax reforms.

Meanwhile the ‘Greenback’ is likely to be weakened by the release of the Philadelphia Fed Manufacturing Index this afternoon as analysts predict it will show that manufacturing activity fell from 32.8 to 25 in April.

Canadian Dollar

The Pound continued to trend higher against the Canadian Dollar (CAD) this morning, reaching a new six-month high as the ‘Loonie’ was pressured by the drop in oil prices, with a better than expected US crude inventory reading yesterday dragging on oil markets.

Australian Dollar

The Pound Australian Dollar (AUD) exchange rate showed robust performance this morning as investors remained cautious towards the risky ‘Aussie’ amid falling commodity prices and global political uncertainty.

New Zealand Dollar

Sterling tumbled against the New Zealand Dollar (NZD) overnight on Wednesday following better than expected inflation figures from the antipodean nation, with the inflation rate rocketing from 1.3% to 2.2% in the first quarter of 2017.

However GBP/NZD was able to rally in early European trading as markets questioned the likelihood of the inflation holding above 2% in the second quarter.

 

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