The UK election appears to be driving trading this morning, with the pound falling following publication of the latest opinion polls.
Spreadex Analyst, Connor Campbell commented – “Yesterday’s Guardian/ICM survey has the Tories’ lead over Labour down to 12 points, while a Times/YouGov poll suggests that Theresa May will fall short of an actual majority by 16 seats. Combine that with last week’s surveys suggesting just a 5 or 6 point deficit for Corbyn to overcome, and everything points to Labour having momentum on its side. That means sterling is facing a more volatile run-in than many would have predicted back when the Prime Minister announced the snap election in April.”
Campbell added – “All of this caused the pound to drop by 0.4% against both the dollar and the euro – remember sterling’s recent growth was entirely predicated on a Tory landslide – quickly erasing the mild comeback the currency managed on Tuesday. As for the FTSE, the UK index was obviously pleased by the pound’s election-fearing performance, rising 0.3% to climb within 10 to 15 points of its all-time peak.”
The Eurozone has its own set of data to deal with this morning in the form of the region-wide inflation reading.
“Analysts are expecting the figure to fall from 1.9% to 1.5% month-on-month” suggested Campbell “something that won’t please the euro – which is up against the pound but flat against the greenback – as the currency is hoping the ECB will tighten up its monetary policy sometime in the near future. The Eurozone indices appear content enough with this situation, the DAX and CAC both rising 0.2%.
US equity markets closed lower on Tuesday as major bourses snapped their 7-session winning streak on their return from the Memorial Day holiday.
Accendo Markets Analyst, Henry Croft noted – “The S&P 500 fell back from Friday’s record closing high as investors took risk off the table with political uncertainty continuing to weigh on sentiment, while the Nasdaq also took a step back from record highs despite Amazon surpassing $1000/share for the first time. The Dow Jones underperformed as financial giants Goldman Sachs and JP Morgan led laggards.”
