Good morning,
GBP: Theresa May clings on
Today the Conservatives will have to front up to the European parliamentary election results which are likely to yield a heavy defeat. In light of that, you would expect it to be the final piece of the puzzle to shift Theresa May out of the door.
Andrea Leadsom, senior cabinet member, has stepped down from her position in response to the renewed attempted to coax out a further referendum – she firmly believes this goes directly against the democratic result of the 2016 election.
Should Theresa May decide to step down, the most obvious choice in replacement is likely to be a pro-Brexit Conservative leader, however, such a leadership contest could run all the way into Autumn and possibly requiring a further Brexit extension. This explains the logic behind the pound suffering daily losses. Every scenario we look at is just the beginning of another drawn-out chaotic process, with no end in sight.
EUR: Busy data calendar hiding behind EU elections
The UK and the Netherlands are kicking off the EU elections today, with the remaining 26 EU member states over the next three days.
The data calendar is packed today, so keep a close eye on price action if you’re looking to hedge or protect against the voting results on Sunday. The ECB minutes from April will be scrutinised as usual with particular focus on growth outlook and inflation. Flash PMI across the Eurozone and German business conditions will reveal whether the Trade War has weighed down growth prospects.
Have a great day.