UK Election 2015

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On Tuesday indices in Europe and the US were weak after the long weekend, with the USD bid across the board, commodities were softer. During Wednesday morning’s session, the US dollar has pulled back from Tuesdays highs against the majors; EURUSD: 1.0920 GBPUSD: 1.5422 USDJPY: 123.00 The strong data from the US on Tuesday reminded traders that that the “data dependent rate hike” from the Fed, might not be as far off as had been expected. Openin…

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Sterling has rallied from early April lows to trade at the highest level against the US dollar since the start of 2015 (YTD). In 2014 GBPUSD peaked at just below 1.72, then trending down to the April 2015 low of 1.4565. As the pair traded to the April lows, the media coverage was bullish on the US Dollar with the expectation of a June rate hike from the Fed, and bearish on Sterling with the UK election outcome uncertain. Fast forward to the middle of May, and the US Dollar has been on the ba…

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Sterling surged as the exit polls were released last night, will the unexpected forecast that the Conservative Party would gain an even larger share of seats. The opinion polls prior to the election had the Labour and Conservative Party tied, however the Tory’s support has come through at the ballot box. The number of seats required to have an outright majority is 326, the initial exit polls estimated 316, with the latest view being around the number for a clear majority. T…

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Initial reaction in the FX market is that Sterling surged against the US Dollar and the Euro. The BBC exit polls released at 10pm (London) estimates that the Conservative Party have gained a larger amount of seats than had been estimated, approximately 316, meaning that they are the largest party. The Tory’s wouldn’t have enough seats to have an outright majority (326 seats), however the market’s reaction is that they believe the Conservatives will hold power in some form o…

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The exit polls released by the BBC at 10pm (London) predict that the Conservative Party has gained a larger proportion of seats in the general election that was expected. BBC Exit poll (Survey by NOP/Mori) Conservative: 316 Labour: 239 Scottish National Party: 58 Liberal Democrats: 10 Plaid Cymru: 2 Green Party: 2 Other 10 UKIP: 2 FX Market reaction Sterling was bid on the release of the expectation that the Conservative Party…

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The final economic indicator on the health of the UK economy has beaten analysts’ expectations. The Markit / CIPS UK Services PMI reading for April is an eight month high; 59.5 vs 58.9 previously. The release will be a welcome to George Osborne, following on from Tuesday’s poor construction PMI, the weak manufacturing PMI and miss for preliminary Q1 GDP estimate. The services sector is the main component of the UK economy, with expansion in this sector significantly outwei…

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The latest statistical data from the UK has missed analysts’ expectations. The Markit/CIPS UK Construction PMI reading for April was 54.2 compared with 57.8 in March. The data follows the poor Manufacturing PMI for April and the weak Q1 preliminary GDP estimate. The Markit release highlighted that despite the slower rise in new orders, there was a robust pace of job creation, which has put further pressure on sub-contractor availability. The pressures on labour availability could…

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The Office of National Statistics (ONS) preliminary reading for UK Q1 GDP data disappoints markets and misses expectations; +0.3% compared to a median estimate of +0.5%. In the fourth quarter of 2014, GDP was estimated to have expanded at +0.6%. The UK economy is the fastest growing in the G-10, with improving employment and record low inflation. The economy is at a pivotal point, as we exit a multi-year recession, though the headline reading is the weakest QoQ growth since Q4 2012.…

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The Bank of England has released the minutes of MPC meeting held on 8 and 9 April 2010. At the meeting the MPC members voted unanimously (9 -0) to leave interest unchanged at 0.50% and asset purchases (£375bn). Two of the MPC members regarded this month’s decision as finely balanced most likely Martin Weale and Ian McCafftery, who have previously dissented at the August 2014 meeting. The MPC remit is to target inflation at 2%, the most recent readings of CPI have been recor…

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Major analysts have released notes warning their clients that the minority government outcome from the general election on 7 May is “likely” to weaken Sterling. The most recent polls (YouGov) show the two major parties neck and neck. UBS along with Citi have said that the possible formation of a minority government will lead to a clear decline in the pound, at a time when Sterling has traded at a 5-year low. With voters heading the ballot box in just over two weeks, the exp…

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Sterling has traded to a 5 year low in the currency markets against the US dollar on the back of poor construction and production data released by the ONS. On Thursday the Bank of England’s MPC announced their decision to leave interest rates and quantitative easing unchanged as expected, with the pound weakening following disappointing trade deficit figures. Thursdays close was the lowest level for Cable since June 2010, in part due to a strong dollar combined with the weak UK d…

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The UK is headed towards its closest general election in modern history, with voters going to the polls on Thursday 7 May 2015. The first past the post political system didn’t produce the expected majority government in 2010, with the same outcome expected next month. Parliament has been dissolved by the current PM, David Cameron, and the official campaigning period has begun. In reality the preparations for the election started 18 months ago, with the leaking of policies and pol…

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The March Markit/CIPS UK Manufacturing PMI reading was an 8 month high, as growth of production and new orders accelerated. The seasonally adjusted reading increased from February’s 54.0 to 54.4, matching analysts’ estimates. The report from Markit highlighted that the input costs and selling prices had both, which is to be expected with zero inflation, and oil prices significantly. The 54.4 figure is well above the 50.0, which signifies expansion, carrying on from yesterda…

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The latest data from the Office for National Statistics estimates that in 2014, the UK economy grew 2.8% across the year, up 0.2% from previous estimates. In Q3 and Q4 of 2014 the economy expanded by 0.6%. Growing at a faster pace than previously estimated, has been boosted by strong export performance. There had been concerns that the weakening of the Euro, could harm exports as the Eurozone is the UK’s major trading partner. GBP In the FX markets EURGBP traded lowe…

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The official starting gun for the UK general election has begun, as the current Prime Minister David Cameron ceremonially visits the Queen to dissolve parliament. The coming UK election is likely to have no overall majority and is one of the closest modern elections. What does this mean for Sterling? The uncertainty of the electoral outcome is a risk to the UK’s currency. The two main parties (Conservative and Labour) will need to create a coalition to form a government but…

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