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Pound under pressure as Conservative talks with DUP continue

Pound under pressure as Conservative talks with DUP continue

The Pound is likely to come under pressure this week as Prime Minister Theresa May continues talks with the DUP on a ‘confidence and supply agreement’ that provides the Conservatives with a commons working majority or risk an inferior minority government increases the potential for another general election.

ADS Securities Analyst, Konstantinos Anthis suggested “It looks as though the balance of risk for the Pound is to the downside as the uncertainty coming from the political arena and the Brexit negotiations will take its toll on business activity.”

“Potential dollar weakness might mask this effect on the GBP/USD pair but overall sterling looks vulnerable. Particularly against the euro, a possible surge in demand for the single currency will put the pound under pressure as investors will be eyeing the 0.8850 and 00.8900 levels.”

A quiet start to the week for the European indices saw them clawing back some of last week’s losses. The FTSE especially benefiting from a Brent Crude rebound.

Spreadex Analyst, Connor Campbell commented “The UK index rose 0.4% after the bell, leaving it around 40 points away from the 7500 mark it abandoned as oil began to fall. Its commodity stocks are driving the comeback – BP and Shell are both up 0.8%, while there is a remarkably consistent level of 1% growth in the mining sector – following Brent Crude’s own $46 per barrel-crossing 1.5% rise.”

“Over in the Eurozone the region’s indices were pretty perky. The DAX was back above 12800 with a 0.6% rise, while the CAC climbed 0.8% to clamber back past 5300”

US equity markets finished the week mostly positive, with Energy names snapping a 4-day losing streak to aid sentiment.

Accendo Markets Analyst, Mike van Dulken noted “The strong performance from the sector led the S&P500 higher, offsetting weakness in Healthcare, while Tech resumed its recent strength, helping the Nasdaq to outperform. The Dow Jones closed flat, as Retail names offset gains for Visa, Boeing and Microsoft.”

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