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New British Prime Minister Sir Kier Starmer
As predicted, the Labour Party won the British general election, winning a majority of around 170 seats in a dramatic turnaround from the “Get Brexit Done” election of 4.5 years ago.
It was the worst ever election result for the Conservative Party, which lost around 250 seats as some 20% of a very low turn-out voted for Reform UK, which won several seats, as did the Green Party. There was a strong showing for the Liberal Democrats too, which now has 71 seats.
There was very little reaction from the currency markets, with the pound barely moving against the euro, although it has strengthened by just over 0.15% against the US dollar.
However, attention will now turn to the second round of the French election this weekend, where the governing party is also likely to be ousted.
Other news yesterday included Construction PMI in the eurozone, which fell sharply in Italy and France but strengthened in Germany, albeit while remaining in strongly negative mode at 39.7.
We have just heard that house prices in the UK fell again last month. According to the Halifax House Price Index, prices fell by 0.2% in June, taking annual rises to 1.6%.
Coming up today are several speeches by US Federal Reserve policymakers, ahead of Non-Farm Payrolls data at 1.30pm UK time.
European Central Bank (ECB) President Christine Lagarde will also be speaking. And with the election over, Bank of England (BoE) officials are now allowed to comment publicly again and several will be doing so on Monday and Tuesday next week.
Make sure any upcoming transactions are protected against the risks of sudden market movements. Secure a fixed exchange rate now with a forward contract; call your account manager on 020 3918 7255 to get started.
GBP: Sterling stable after election night
Labour’s landslide win has had a negligible impact on sterling as it has been priced in for some weeks. However, sterling is close to 1% stronger against the US dollar, yen and Swiss franc than last week.
Next week, watch out for speeches by BoE officials including its chief economist Huw Pill on Tuesday. There is also GDP on Thursday.
GBP/USD past year
EUR: Euro awaits France’s election result
The single currency has strengthened in the past 24 hours, with France’s pivotal election result expected on Sunday. German industrial production has just been reported to have weakened by a surprising 2.5%, its worst performance since December 2022.
EUR/USD past year
USD: Dollar hit by rate cut expectations
The US dollar lost across the board yesterday, ahead of Non-Farm Payrolls data that is expected to follow other recent results in showing a softening US economy. Analysts now swing 66% in expectation of the 0.25% interest rate cut from the Fed in September.
USD/GBP past year
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