- Sterling slides ahead of close election
- USD strengthened by safe haven flows
- Heavy data week awaits us
After deranged murderers went on a rampage in central London and were thankfully put down by the police before further carnage, there is a growing acceptance that tolerance of these extremist views cannot be excused any more. Hate and violence is no less acceptable when shrouded with pseudo-faith overtones than it is when the perpetrator is any other kind of lunatic. It is impossible for any sane person not to feel so very sad for those who perished or were injured and so very sorry for their families and friends, but also for anyone who saw such unthinkable acts of violence. All have had their world changed by just a few seconds of madness. I really hope Theresa May meant it when she said ‘Enough is enough’. Actions are now needed to fulfil the Government’s primary objective – to keep the people safe. It will be too late for the victims in Manchester and London, but there are 65 million or more who need that certainty.
On Friday, the US employment report was a disappointment and the US Dollar weakened as a result. It did bounce back after the UK attacks, as investors reacted by buying safe haven US treasuries. That is a common reaction and the unwinding of that knee-jerk reaction is also fairly standard fayre.
Aside from the weekend’s horrific events, and rather cruelly it seems, the rest of the world carries on. For the UK financial markets, the major event happens this week. If the pollsters have got their sums right (no certainty of that, of course) Thursday’s UK general election is a much tighter affair than anyone would have predicted a month ago. Each new poll tugs the Pound around, but it is inevitable that Sterling will remain weak as we approach Thursday and the result in the early hours of Friday will have a significant impact.
The general rule of thumb suggests that a result of no overall majority will knock Sterling down like a straight right from Anthony Joshua. The resolution of that situation into a coalition or a minority government wouldn’t really help the Pound much. A small majority for the Tories would allow the Pound to bounce back a little; and the removal of the uncertainty an election brings would do that in any event. A significant majority for the Conservatives would, it would seem from the reactions to various polls, considerably boost Sterling. I cannot find any pollsters who predict a Labour victory, but they got the Brexit result wrong, the Scottish Independence result wrong, and the last election wrong, so who knows? The current odds being offered by Coral’s are ‘twelve to one on’ for a Tory win and thirteen to two for a Labour one. Have you ever seen a broke bookie?
For fear of being a parochial one-story reporter, I must mention the other news of the week. We will get a shower of Service Sector Sentiment Indices in the early part of the week. These come from the EU, UK and US; and a number of other countries besides. Later in the week we get the National Institute of Economic and Social Research (NIESR) estimate for UK Gross Domestic Product (GDP) growth in May (a slight improvement is forecast) and we’ll get Chinese Inflation data, Canada’s Employment report, which is forecast to be a little more positive. CAD buyers; like most GBP sellers, may wish to act before the election to avoid the risk of a weaker Pound anyway.
As well as the UK election, Thursday brings the European Central Bank (ECB) interest rate decision. The decision will be to leave everything on hold, so little change is forecast from that.
There is a lot more besides and I will cover that throughout the week, but for now I will leave you with some of the more bizarre news headlines ever seen. These include the comprehensive ‘Son of Westboro Baptist Church Leader attacked on live TV by naked 500lb man who burst out of the bathroom, sat on him and shouted "Who’s your daddy now?"’ No further text is required for that one. The other one that makes you read it twice is ‘ Woman in sumo wrestler suit assaulted her ex-girlfriend in gay pub after she waved at a man dressed as a Snickers bar.’ And this is not funny but the headline reads, ‘One-armed man applauds the kindness of strangers’. Finally, ‘Psychics predict the world didn’t end yesterday.’
A thank you to all the men and women in and out of uniforms who run toward danger so that we can run away. Thank you to all the health workers who arrive at a scene of devastation and deal with each individual as though they were the only thing that matters. And a thank you to their loved ones for supporting them in what they do. It is only at times like these that we see the true value of their valour and expertise.