DailyFX European Market Wrap: UK Politics Dominates Market Action
UK politics dominates as everyone questions the future of the British Prime Minister and the stability of her government. Sterling is once again being driven by UK politics. There’s a conflict of political uncertainty but at the same time there’s now less chance of another Scottish referendum due to the losses of the SNP and there’s now more likelihood of a soft Brexit – which is seen as a positive for the markets.
UK consumer spending has fallen for the first time since 2013. According to Visa, UK households were turning more cautious even before last week's shock election result. The figure for May was 0.8 percent lower than the same period last year. The firm said rising prices and stalling wage growth were the cause.
All of the UK election uncertainty has pushed business confidence to sink "through the floor", according to a lobby group. 700 members were polled at the Institute of Directors and it found "dramatic drop" in confidence following the hung parliament result but it also found that there was "no desire" for another election this year and that this would have a negative impact.
French politics is looking quite different with the new President Emmanuel Macron expected to comfortably win a large majority in parliament. His brand-new party full of unknown political members won almost a third of votes in the first round of parliamentary elections and seeks a mandate to push through the sweeping changes he promises.
--- Written by Katie Pilbeam, DailyFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.