The pound is showing little movement in Tuesday trade. Currently, GBP/USD is trading at 1.2679, down 0.02% on the day. On the release front, there are no major British events. In the U.S., CB consumer confidence improved to 134.1 points.
The U.S. consumer remains very optimistic about the economy, according to the latest CB consumer confidence index. The index jumped to 134.1 in May, up from 129.2 in the April release. This score easily beat the estimate of 130.1 and is close to 18-year highs. Retail sales were soft in April, but the sharp improvement in consumer confidence has raised hopes that retail sales data will improve in May.
The European parliament elections have shaken up the political landscape across the continent, as populist and nationalist parties made strong gains at the expense of the center-right and center-left mainstream parties. The U.K. also participated in the elections, and the Brexit Party easily won the day, capturing 29 seats. Labor came in second place with 10, and the Conservatives won just 4 seats. The election results were a resounding backlash against the mainstream parties for their handling of Brexit, which has dragged on past the original deadline, with no solution in sight. For investors, the worst-case scenario is a no-deal exit, which could undermine the economy and send the British pound sharply lower. Unless May can pull a Brexit rabbit out of her hat, it will be up to her replacement, as yet unknown, to try and hammer out a withdrawal deal with Brussels.