The Pound (GBP) surged against the other majors on Tuesday following the surprise announcement from Prime Minister Theresa May calling for a snap election to be held in June, with her main political opponents voicing their support.
The majority of current opinion polls suggests that the Conservatives have their largest lead against Labour since Thatcher, with a lead of around 17 points likely to give the Tories a larger majority in Parliament.
Investors believe that a landslide victory for Theresa May would give her a greater mandate to pursue her Brexit plans, while also possibly weakening the SNP’s claim for a second independence referendum should they lose momentum.
The Pound Euro (GBP EUR) exchange rate jumped by over a cent yesterday following the announcement that Theresa May would be seeking to hold a snap election.
Meanwhile the single currency was also weakened by growing uncertainty ahead of the French elections, with recent polls suggesting it is too close to call between the four leading candidates.
The Euro is likely to slide even further later this morning with the release of the Eurozone’s latest CPI data, which is expected to show that inflation tumbled from 2% to 1.5% in March.
Sterling rocketed up against the US Dollar (USD) yesterday as the pairing was buoyed by the surprise announcement that the UK government would be holding an early election
The ‘Greenback’ struggled to hold off the Pound’s advance as it was softened by further geopolitical tensions, with investors fearing the possibility of the US taking military action against North Korea.
On the data front, the US Dollar may drop again this afternoon as analysts forecast that US crude stockpiles are likely to have declined for the second week running.
The Pound Canadian Dollar (CAD) exchange rate jumped to a seven-month high yesterday as the Prime Minister’s announcement caused the pairing to leap by around four cents, while the ‘Loonie’ suffered as oil prices began to tumble once again.
Sterling climbed around five cents against the Australian Dollar (AUD) on Tuesday as markets expected the UK government to be strengthened by the early election.
Meanwhile the ‘Aussie’ also retreated as iron ore prices continued plummeting, having now fallen to $63.20 a tonne, a 33.4% decline since striking a multi-year high of $94.86 in February.
New Zealand Dollar
The GBP NZD exchange rate also made significant gains on Tuesday following Theresa May’s decision to hold an early election, with not even a 3.1% rise in dairy prices at the latest dairy auction able to prevent the New Zealand Dollar’s decline.
This week the US Dollar was touching three-year highs when valued against a basket of major currencies. The greenback’s traditional role as one of the safe-haven currencies is helped by a domestic economy that is largely immune to the threats of the coronavirus.
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