Overnight we have seen Sterling appreciate on news of a probable Conservative majority. GBP/USD touched it’s highest levels since February this year. It is inevitable that David Cameron will be Prime Minister again which will give the UK additional security on economic policy. One outstanding result is the performance of the SNP who won 56 out 59, a result that will only strengthen the national movement. The Conservatives are only forecasted to achieve a small majority which means passing legislation may still be tricky. In addition, the Conservatives have promised a referendum on Europe if they win which could result in some uncertainty once the dust has settled. A YouGov Poll earlier this week showed the UK would vote 45% to remain part of the EU and 33% to leave. This would be another political event that would add further strain to the Pound.
Meanwhile, Greek Finance Minister Yanis Varoufakis said his government is prepared to go “down to the wire” in talks with its creditors. Greece has less than a week to prove to the European Central Bank that it’s serious about reaching an agreement with international lenders. Failure to make progress in bailout talks may prompt the imposition of tighter liquidity rules on its banks. On Monday, the Eurogroup meets in Brussels with the subject of Grexit still hot on the agenda.
Today’s docket will continue to be dominated by the UK General Election as markets digest the news. On the economic docket, the focus will be firmly on the all-important non-farm pay roll release. This week’s ADP figure posted a bearish 169k, a sign that today’s number could post south of the expected 227k. Recently ADP has been accurate in predicting the direction of Friday’s non-farm pay roll. Also on today’s docket we have US unemployment rate forecast to register a reading of 5.4%, a slight improvement on last month’s 5.5% figure.