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Snap Election Backfires

  • GBP - Parliamentary Elections
  • EUR - ECB Press Conference
  • USD - Unemployment Claims: 245K

On 18th April, UK Prime Minister Theresa May called a snap election. At the time, the polls looked in her favour and it seemed as if she would easily win with a strong majority. However, last night’s events told another story. The opinion polls over the past few weeks had given warning of the growing support for Labour and it might not have been as easy as originally thought. The exit polls showed the Conservatives would fall short of a majority and were predicted to win 318 seats. Sterling fell sharply on the back of this. The results of the constituencies continued to tell the same story. Ultimately, some of the marginal seats the Conservatives had been hoping for swung in Labour’s direction. The result is that we have a hung parliament, although Conservatives are still the largest party and the attention of today will now turn to possible coalitions and deals which will allow a Government to be formed.

In the Eurozone, the ECB kept interest rates at zero percent yesterday. In the press conference which followed, they cut the inflation forecasts, citing overestimation of the impact of rapid job creation on wages and prices as the reason for the cut. Across the pond, ex FBI director, James Comey, testified to the Senate Intelligence Committee. During the testimony, he called President Trump a liar at least three times and he mentioned how he had documented every meeting he had had with Trump as he thought he might lie about them. He has challenged Trump to produce tapes of their conversations together. He also mentioned how he believes Trump did direct him to stop the investigation into the former national security adviser Michael Flynn. Trump’s personal lawyer has since rejected all the allegations made by James Comey.

  • GBP - Manufacturing Production m/m: 0.2%
  • CAD - Employment Change
  • CAD - Unemployment Rate

Over the course of today, the market attention in the UK will continue to focus on the election, with the news filled with speculation of Theresa May’s resignation, although it has also been signalled she will be carrying on as leader, and any possible coalitions which may form. The UK will also be releasing the manufacturing production figure, expected to bounce back to 0.8%.