By Matthew Vassallo
With little economic data of note out today, investors focus will likely be centred on the ongoing Tory leadership battle, which has now been whittled down to just five candidates. The remaining number 10 hopefuls are set to lock horns in a series of live televised debates over the weekend, with each one trying to ensure they are not bottom of the pack by the time the next round of internal culling takes place on Monday.
As such, we could be set for a series of political bomb shells to be thrown, as each Conservative candidate tries to gain an edge over their peers, until the final two candidates are left standing. By this stage, the MPs are set for their summer recess as Parliament shuts down for a month. Upon their return, the remaining two will battle it out over a longer 6–8-week campaign battle until the final votes are cast by the wider Conservative membership and the lucky hopeful takes up the reigns as the De facto Prime Minister.
Looking at the currency markets and the Pound has managed to hold its position against the Euro better than many expected, certainly when you compare its current value against the single currency to its standing against a host of the other major currencies. The current situation is almost unique in the fact that usually any type of significant political upheaval or instability, will inevitably drive the value down for the currency in question.
I think its poignant that since Boris Johnson resigned as PM, we have seen the Pound stabilise against a host of the major currencies, but still seen its value disintegrate against others (The USD being the prime example). The greenback remains the currency of choice for investors, which is unsurprising considering its historical standing as haven investment. With the global markets giving no indication that they are set for a sustainable upturn, as the economic repercussions of the ongoing crisis in Ukraine and the global food shortage driven by rising inflation and cost of living, continue to put a stranglehold on any affluent progression.
Looking at the various currency pairs and EUR/USD continues to trade close to parity, and 12 cents lower than it was at the turn of the year. Whilst that statistic is shocking in itself, it is overshadowed by the Pounds current standing against the USD, which has fallen to within a quarter of a cent of its value against the Euro.
Watch this space…