Saturday, 10 June 2017

Saturday, 10 June 2017

A Strong, Stable, Shambles

It hasn't quite gone according to plan for May!

Poor Theresa May; standing outside Number 10 almost a month ago she looked like the cat that got the cream. A masterstroke the media called it - perhaps she would finally be rid of her socialist foe and be left to negotiate a potentially hard British Brexit.

Yesterday the British people went to the polls to do decide who should preside over, not just Brexit negotiations, but Britain's future. It must have been an incredibly difficult evening at Conservative HQ: having orchestrated one of the very worst election campaigns in recent memory. The nerves were justified; the Conservative party lost twelve seats, Labour added twenty-nine and the Liberal Democrats added four. The result was a hung parliament: no majority for any one party, no government- strong and stable indeed.

So What Happens Now?

Three hundred and twenty-six seats are required for a party to form a majority government and, with no party able to achieve this independently, the courting process will now begin where the Conservatives and Labour will look at forming either a coalition or a loose alliance with one or more parties.

In 2010 it was the Conservatives and the Liberal Democrats who hopped into bed together - a dalliance that Nick Clegg unfortunately hasn't been able to forget and neither has the people of Sheffield Hallam who decided yesterday to relieve Mr Clegg of his job.

An outright coalition with the Liberal Democrats is off the cards at this election. Tim Farron and co have said that there will be no partnerships with either Labour or the Conservatives. The Democratic Unionist Party in Northern Ireland could be an option for the Conservatives; their ten seats could see the Tories take a majority.

Whilst the Scottish National Party could still well play a part in this saga their stalwart Alex Salmond will not. In scenes that could well have been out of the Scottish play, the Scottish Tories (having campaigned furiously in his area) managed to oust the former leader of the SNP and leave him, with Clegg, on the job hunt.

The clock has now begun for Theresa May, who will need to form a party by the 13th of June when the new parliament is set to meet, or resign; there have been calls for her to do so already. Corbyn and co will be campaigning furiously as well as the aim will be to have a government fully formed ahead of the Queen's speech - which is scheduled for the 19th of June.

What Has This Done to the Pound?

Since the exit polls yesterday evening sterling has dropped, not to the degree it did during Brexit, but by two cents against the euro and just over that against the dollar. Whilst this drop is disappointing for anyone looking at purchasing another currency with pounds, it is worth bearing in mind that, towards the end of last year, GBP/EUR was nearly three and half cents lower.

With this fresh spate of uncertainty it will be worth contacting your account manager here at Foremost Currency Group today to discuss any potential requirements you may have. With no stability in government, and Britain beginning the negotiating process with the EU in just over a week, it is definitely worth assessing your options and discussing strategy with your contact here today.

Today's Announcements

Today, any developments from this morning's election result could have a bearing on sterling; so we could see some volatility over the course of the London session. Today there are also a number of eco-stats from the UK, including: Trade Balance figures, Industrial and Manufacturing Production numbers and Consumer Inflation Expectations. The UK will also publish a GDP estimate later this afternoon. This morning Germany published mixed Trade Balance figures themselves and there are a handful of minor releases from the States. There was a published decline in Australian Home Loans last night and no major economic releases issued from New Zealand.

Blog commentary provided by Foremost Currency

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