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  • Writer's pictureMike Paterson

UK prepares for a new era

Thursday 23 May 2024

Yesterday UK PM Sunak called a snap General Election for 4th July which surprised commentators and his own Party alike with the previously expected timing not til Oct/Nov. Currently his government are around 25 points behind in the polls so consensus seems to be his reasoning would be getting in early with economic "green shoots" currently showing before it gets any worse. Either way it will be a major schock here now if Labour don't come into power after 14 years in opposition but hey, the wierd and wonderful world of politics has produced stranger outcomes and a large voting swing is required. The Pound at this stage has showed little reaction understandably but remains underpinned.

Last night the US Fed FOMC Minutes veered towards the hawkish and we've seen some USD demand return but with JPY supply still helping to underpin other core pairs. Data wise today we've got a few flash PMIs coming out of Europe as I type then US weekly jobless report and US PMIs later. Ukraine/Russia war and Middle East tensions sadly still cast their own very large shadow too.

Equities fell in NY post-FOMC Minutes but have more than recovered their poise and remain underpinned but with profit-takers still lurking as the CB second-guessing continues. WTI has held $76.80 this morning after capping at $78.40 amid the ongoing variables. Gold has fallen back through $2400 after capping at $2420 with some understandable profit taking as I've been warning but appetite for the shiny stuff in the dips remains.

GBPUSD: Holding 1.2700 again yesterday in the retreat from the post-CPI spike to 1.2760 and USD demand later but cappin at 1.2750. EURGBP: Capping around 0.8525 amid the general GBP demand but holding 0.8500 this morning as the ECB/BOE rate cut conjecture and cross flows continue. GBPJPY: Holding 198.80-00 and rallying to 199.75 amid the general JPY supply still before capping this time.

EURUSD: Capping at 1.0845-50 amid the USD demand returning but holding 1.0810 as we continue to range tightly. USDJPY: Support coming in at 156.30-50 amid the better-risk JPY supply and USD demand double whammy but capping into 157.00 where we had some intervention previously and large option interest tomorrow.

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