Good morning,
Last week’s economic volatility is to be replaced once again with politics at least today as Brexit negotiations finally begin and French President Macron celebrates a landslide win for his En Marche party in the French parliamentary elections.
A surprise Bank of England push towards a rate hike acted as support for sterling last week and while movements in interest rates markets, especially on speeches from Bank of England members may allow for some support in sterling, political risk is still very much front and centre. David Davis and Michel Barnier will meet at 10am London time and a joint press conference on the lay of the land will be made at 5.30pm.
Sterling is flat on the session so far, having recovered from a slight blip lower as Asian traders reacted to the news that one person was killed and 8 injured as a van drove into a crowd gathered outside a mosque in North London.
Poor retail sales numbers as well as a slip in industrial production will have also dulled the dollar’s lustre that remains tarnished by the politics of a White House unable to meaningfully advance its policy agenda.
One politician who should have a chance advancing his policy agenda is French President Macron whose En Marche party won the largest majority in a legislative election for 15 years. The Macron Presidency with a policy agenda of closer unification of Europe and with an increasingly strong economic wind and its back is a positive for the single currency in the coming months. Longer term economic and political success weighs very heavily on this Macron government; a term that is waylaid by scandal or obfuscation or a lack of good ideas and the far-left and far-right politics of the Presidential election will gain even more strength in 5 years’ time.