End of cross-party Brexit talks weighs on pound
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The collapse of cross-party Brexit discussions left the pound on a weaker footing, with political uncertainty looking set to dominate the domestic outlook in the months ahead.
Although the first quarter German and Eurozone gross domestic product data showed an improvement on the previous quarter this was not enough to shore up the euro.
A surprise contraction in April’s advance retail sales put some pressure on the US dollar on Thursday, even as belligerent US rhetoric towards China continued to fuel safe-haven demand.
The ongoing escalation in trade tensions between the US and China also weighed heavily on the risk-sensitive Australian and New Zealand dollars.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Markets reacted with disappointment once news broke that talks between the Labour and Conservative leaderships had broken down, leaving the pound to trend lower ahead of the weekend.
As the two sides failed to reach any agreement over Brexit the mood towards the pound soured significantly, with investors still lacking clarity over the shape of the UK’s future relationship with the EU.
With the Conservatives increasingly gearing up for a fresh leadership contest the prospect of further political disruption, even as the next Brexit deadline approaches, GBP exchange rates slumped.
In the absence of any supportive UK data investors saw little incentive to favour the pound against its rivals.
A sense of political anxiety is likely to increase ahead of Thursday’s European Parliament election, with polls pointing towards a strong lead for the Brexit Party.
Unless support for Pro-EU parties picks up the appeal of the pound is unlikely to see any particular improvement in the near term.
Focus will also fall on April’s consumer price index data, which forecasts suggest will show a solid uptick to 2.2% on the year.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
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* Information courtesy of Currencies Direct, Philip McHugh
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)
The contents of this report are for information purposes only. It is not intended as a recommendation to trade or a solicitation for funds. Currencies Direct cannot be held responsible for any loss or damages arising from any action taken following consideration of this information. This article was written by Currencies Direct.
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