Prime Minister Endgame

17th May 2019 Market Update

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🇬🇧 GBP –  After coming under mounting pressure from senior Tory MPs, UK PM Theresa May has promised to set a timetable for the election of her successor in the first week of June, after the next Brexit vote. However, there have been suggestions that the PM will resin if she loses the vote on her Brexit plan for the fourth time. Focus now will be on the battle for leadership in the UK Tory party, with Boris Johnson announcing that he will run for leader once Mrs May goes, which could bring in a more Brexiteer PM.

Furthermore, there is increasing nervousness over the upcoming EU parliamentary elections as recent polls are favouring Nigel Farages’ newly formed Brexit party with a majority while both historical leading parties are ranked second (Labour party: 16%) and fifth (Tories: 10%). Lib Dems have moves into third place and even the Green party are ahead of the Conservatives.

Today, markets will continue to focus on Brexit and the European elections in the absence of any economic news.

🇪🇺 EUR – The EUR found some support yesterday following reports that the US President may delay tariffs on European cars by up to six months, with a formal announcement expected on Saturday according to media.

Inflation will be in focus this morning, with a slower pace of increase expected in April, which could keep the likelihood of any rate hike by ECB way off and pressure the single currency.

🇺🇸 USD –  Fed speakers Brainard and Kashkari helped lift the dollar yesterday as they did little to support the market’s expectation of the Fed cutting rates before year-end. The US China trade war continues to heat up with President Trump’s decision to add more fuel to the fire with his executive order that bans Chinese telecom firms Huawei and ZTE from doing business in the US.

Very little on the calendar today, with only US Michigan sentiment expected to show some improvement this afternoon, followed by speeches from Fed’s Clarida and Williams to round up the week.

 

Summary:

GBP: Pound falls further on fears of a Brexiteer PM taking over

EUR: Finds support as US delays auto tariffs

USD: Fed speakers support dollar as rate cuts look less likely


 

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Darren Kilner

Darren Kilner

Darren is Head of Dealing at FairFX. Darren lives and breaths FX, his Mastermind topics are G8 currencies and economic forecasts.

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