The pound could be set for an extremely volatile month ahead with British politics and Brexit about to act as a major driver for the price of sterling once again. With local elections taking place in England today, any big swings from one party to another could create additional volatility for the pound. There are 4,400 council seats up for grabs making up the total of 150 local government authorities. Tomorrow morning could see a very interesting start to the day ahead of the Bank holiday weekend.
With mixed feelings over Brexit and the issue of the customs union it is difficult to see how things will pan out although there is a chance that Theresa May could be seen to lose votes in London where 40% of those seats are based. A poor outcome could put added strain on the government although it will be the vote in the House of Commons later this month that will really dictate where Brexit is heading and help shape sterling. The expected vote also inches the UK that little bit closer to a general election which would in my view would be very damaging for the pound in the short term especially considering this would be the third general election in just four years.
Clients with a US dollar requirement should pay attention to the US non farm pay roll numbers released tomorrow where a big number is expected. Anything positive here should give a further boost for the US dollar so clients looking to buy dollars may wish to plan around this event.
UK services sector data for April from the Purchasing Managers Index arrived slightly weaker than expected although still showing expansion in the sector. Although the data was lower than forecast, it still jumped higher up on the March figures suggesting it is not all doom and gloom with the British economy.
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