To kick off the day, the rate has already begun to fall slightly, with it briefly touching 3-week lows. This comes as the Pound finds itself with a renewed downwards pressure acting on it following the recent political issues in the UK. Yesterday it was announced that Boris Johnson would need to face a confidence vote as the threshold of 54 letters of no confidence had been reached. To win he needed to gain at least 50% of votes plus one vote to stay in office, meaning 180 in total. Late into the evening it was announced that Boris had won the vote, maintaining a majority but only by a slim margin of 59%. This in turn weighed on the Pound as it highlights the current issues in Parliament, with calls for Boris to resign still remaining at an all-time high. As for the Dollar, it has found itself with not much to grasp today due to the lack of data but is still benefitting from the market’s hawkish expectations of their Federal Reserve. For trading today, it is unlikely that the rate will see much upwards movement as trading will predominantly focus on overall market sentiment, potentially worsening the Pounds current losses.
The Sterling-Euro rate also finds itself licking its wounds that were dealt yesterday following Boris Johnsons no confidence vote. It was, however, revealed that he will remain in power, protected from another confidence vote for a year after managing to succeed by a majority vote. The victory he obtained was narrower than the one secured back in December of 2018 by former PM Theresa May, who then resigned six months after. With this in mind it is likely that this current political uncertainty will linger for some time despite Johnson winning last night’s vote. It is unclear how much of an impact this will have on the Pound but for the time being it will certainly act as a headwind. On the contrary, it is expected that in the coming days most of the markets attention will switch back to the Bank of England and their interest rate stance. As for the Euro, it is not printing too much movement lately mainly because investors are awaiting the interest rate decision from the European Central Bank due on Thursday. As for trading today, it is unlikely that the rate will move too much due to the lack of data from both sides of the table.
morning Update published by Frank Brightman (07/06/2022)