Day of Reckoning upon Conservatives

By Ashley Finill

The UK election enters its final week with voters heading to the ballot box on Thursday the 4th of July as the day of reckoning dawns upon the Conservatives. Throughout this election, the polls have all suggested a big Labour win, which could see a record number of seats won for a party in UK election history. With that being said, the predicted result for this week is likely already heavily priced into the currency market, although now as we edge close to election day, sterling has started to wobble, and has seen just under a cent drop off from the highs seen a couple of weeks ago. While the Euro has turned around in fortunes as it has also gained on the US Dollar by around half a percent. Sterling is also down on the US dollar by around half a percent from the start of June.

Could we now be starting to see sterling’s impressive run against both the Euro and dollar starting to fizzle out as election day looms? As pointed out in previous reports, uncertainty is sterling’s foe, and although a huge majority is expected for Labour, the result and how damming it may be for the Conservatives is not set in stone, so should there be a surprise come Friday morning, the pound would almost certainly react to this. Also, next month at the start of August is the next Bank of England meeting where we could see an interest rate cut which is also likely to have an adverse effect on the Pound. Those of you who are looking to buy Sterling may want to take advantage of this current dip should you not want to take the gamble on uncertainty.

French Elections

Overnight the results of the first round of the French elections were announced and Marine Le Pen’s far-right National Rally party secured the biggest vote share. The National Rally party had a strong lead with 33% of the vote whilst President Emmanuel Macron’s Renaissance party came in third place with 20.76% of the vote. Although Le Pen’s party came in as front runners in the first round, the result is not as good as expected for the National Rally party and as a result, the Euro clawed back some ground on both Sterling and the dollar. The feeling in France is that Le Pen’s party will secure the win as support for the party has increased with their result last night being almost double the 18% they achieved in the 2022 elections. Should they win, this would be the first far-right government since the end of the second world war; the second round of voting takes place on the 7th of July.

Data this week

Monday, July 1st

12.00pm – Germany – Consumer Price Index

2pm – US – ISM Manufacturing PMI

7pm – EU – ECB President Christine Lagarde Speech

10pm – NZD – Building Permits & NZIER Business Confidence

Tuesday, July 2nd

1.30am – AUS – RBA Meeting Minutes

7.30am – EU – ECB’s De Guindos Speech

8.30am – EU – ECB’s Elderson Speech

9am – EU – Unemployment rate & Consumer Price

10.30am – EU – ECB’s Schnabel Speech

1.30pm – CAD – S&P Global Manufacturing PMI

1.30pm – EU – ECB President Christine Lagarde Speech

1.30pm – US – FED Chair Powell Speech

2pm – US – JOLTS Job Openings

11pm – AUS – AiG Industry Index & Judo Bank PMI

Wednesday, July 3rd

1.30am – AUS – Retail sales & Building Permits

9am – EU – PPI

12.15pm – US – ADP Employment Change

12.30pm – US – Initial Jobless Claims

1.45pm – US – S&P Global Composite

2pm – US – Factory Orders & ISM Services PMI

6pm – US – FOMC Minutes

Thursday, July 4th

1.30am – Aus – Exports, Imports & Trade Balance

6am – Ger – Factor orders

6.30am – CHF – Consumer Price Index

11.30am – EU – ECB Monetary Policy Meeting Accounts

UK – Parliamentary  Election

Friday, July 5th

6am – Ger – Industrial Production

9am – EU – Retails Sales

12.30pm – CAD – Unemployment rate

12.30pm – US – Non-farm Payrolls

2pm – Cad – Ivey Purchasing Managers Index