UK election points towards historic Labour majority
|-
UK election points towards historic Labour majority.
-
Swiss inflation drives CHF lower.
-
US holidays signals likely lower volumes and volatility.
European markets are maintaining their upbeat tone as we move through the week, with the FTSE 100 leading the way as the electorate head to the polls. Today’s UK election looks unlikely to cause too many shockwaves given just how resounding the Labour party victory is expected to be, with markets feeling optimistic over the potential change at Downing Street. Coming off the back of a volatile 14-year stint for the Conservatives party that saw five Prime Ministers within the past nine-years alone, we are seeing the pound strengthen in anticipation of a shift to a stable Labour majority should that come to pass. The YouGov poll seen yesterday points towards a 212-seat majority, representing the biggest win since 1832. With that in mind, the chance of any substantial surprise looks minimal at best, with traders instead looking ahead to the French election for potential fireworks.
The Swiss franc has seen sharp losses in early trade today, following a 0% monthly inflation reading that once again put pressure on the SNB to cut interest rates. With annual CPI standing at 1.3%, the SNB will be faced with the task of reflating prices just as their Western counterparts attempt to drive down inflation. For the Swissy, this brings fresh grounds for pessimism, coming off the back of a three-week period of weakness for CHF. However, with the SNB policy rate already at a lowly 1.25%, markets continue to see the next 25 basis point cut as likely the last for the time being.
Today’s US Independence Day celebrations should ensure a relatively subdued days trading, lowering volumes and volatility. Coming off the back of yesterday’s cautious approach from the FOMC minutes, the concerning deterioration seen throughout the week’s job data (job openings, ADP payrolls, and unemployment claims) has helped drive US yields and the dollar lower. With the S&P 500 and Nasdaq having hit fresh record highs yesterday, traders in Europe and Asia appear emboldened in today’s trade.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.