Wed, Feb 01, 2023 @ 09:02 GMT
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GBP Holds After London Terror Attack And Conservatives 1% Lead

The London terror attack happened on Saturday, June 3rd, which was the third terror attack in the UK this year following the Westminster terror attack in March and the Manchester terror attack in May. The timing of the London terror attack especially sensitive being just a few days prior to the general election.

The polls conducted by Survation, released on Jun 3rd, are indicating that the Conservative Party’s lead has now narrowed to just 1%. The approval rating of the Tory and Labour Parties are 40% and 39% respectively. Despite the London terror attack and recent polls, the early European session on June 5th has GBP/USD still holding above the support line at 1.2850, trading around 1.2875. EUR/GBP hit a high of 0.8766. last seen on March 14th. Be aware that the election uncertainty will still likely pose downward pressure to GBP crosses before and after the election.

Saudi Arabia, Egypt, UAE and Bahrain today announced a break of diplomatic relations with Qatar due to terrorism and extremism. Saudi Arabia alleged that Qatar has funded some terrorism organisations, such as the Muslim Brotherhood and ISIS, attempting to cause regional chaos.

Those countries ordered Qatari diplomats to leave their countries within 48 hours. Saudi Arabia announced that the border with Qatar is to be closed and cut all land, air and sea contacts with Qatar, urging all “brotherly countries and companies to do the same”.

We can expect that the actions taken will cause a significant impact on the Qatar economy. Qatar is an OPEC member state and the diplomatic ties cut will likely pose uncertainty to the output cut agreement extension and oil prices. The diplomatic ties cut will likely affect oil supply which will result in higher oil prices. However, it will also likely undermine the execution of the output cut agreement, which will pose downward pressure to oil prices. The oil market prospect after the diplomatic ties cut is still vague.

On Monday June 5th, in early European session WTI spot and Brent crude spot saw a 1.4% and 1.48% rebound respectively. Spot gold rallied, being a safe haven in times of uncertainty, because of the London terror attack and the Qatar diplomatic issue, hitting a 6-week high of $1281.89.

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