This is the UK election that just keeps on giving. Mrs May is cow-towing to the Democratic Unionist Party (DUP) in order to hang on to office, while the back benchers in the Labour Party are eating humble pie because they tagged Mr Corbyn as a disaster until he started making promises he doesn’t now need to keep.
Whatever the outcome of talks between the Tories and the DUP, it will be the dominant UK news story today; such is the lack of other top tier data. In spite of the election confusion, Sterling hasn’t slumped, although it is a tad lower than it was before the election results were known. The start of the Brexit talks with the EU are looming and we can expect furious activity over the next week as battle lines are drawn.
As far as the Pound is concerned, politics isn’t the only game this week. Inflation, Retail Sales Employment, Earnings and a Bank of England (BoE) meeting will assail us over the coming week and the forecasts are widely varied. The scene is set for another week of volatility.
We will also see Eurozone Employment, Inflation and Industrial Production data this week. The Euro has benefitted from the weakness of the Pound and has even gained against the US Dollar too. However, forecasters think the Industrial Production data is likely to be poor and that might pull the rug from beneath the Euro for now. That said, the success that Monsieur Macron is having in the parliamentary election in France have steadied the ship for the French political situation. Whether that will help the Euro is another matter entirely.
US data is also plentiful this week. We’ll get Inflation, Retail Sales and Industrial Production numbers but that may be overshadowed by the Federal Reserve’s interest rate decision. For a change, there is a mood that suggests the Fed may edge their base rate targets higher and that would strengthen the US Dollar. That announcement comes on Wednesday evening UK time, so US Dollar buyers might consider protecting themselves ahead of that.
Overnight tonight we will get the Australian Business Confidence Index and a slight improvement is forecast. Later in the week, we get the Australian Unemployment data and there are many analysts who see this declining a smidge. If that is so, the Aussie Dollar, which is already stronger against the Pound, could well push the GBP-AUD rate lower.
And it was a great weekend for British teams of all sorts. The Lions beat the Crusaders in a tough game. That was against the predictions of the ‘experts’. England’s Rugby Union team beat the Argentineans on one of the most exciting games I have seen for a long long time. And finally, England’s under 20 football team won the U20 world cup, beating Venezuela in the final. The older players haven’t managed to come near that level of success since 1966. It bodes well for the senior team, then, as these guys add the years, but wow, what kind of pressure do they now face from the British press?!
Election summed up by the internet
So the Conservatives won, but lost
Labour lost but won
The Scottish National Party (SNP) won and lost in Scotland – but still won
The Conservatives won in Scotland – but still lost
UK Independent Party (UKIP) lost badly, but because of Brexit, they have already won
The winner, Mrs May, is being told to resign because she didn’t win, but she won’t, because she won….even though she lost…face.
And the DUP may have won a little in Northern Ireland, but they could yet be the ultimate winners.
I think that sums it up.