Vote to create a solid platform for Brexit negotiations.
British Prime Minister Theresa May called a general election in the UK yesterday to be held on June 8th.
Mrs. May inherited a mandate to which she had subscribed when she took over the leadership of the Conservative Party. She was also left with a slim majority that left her struggling to fulfil that manifesto. To that was added the extremely divisive Brexit vote and the ramifications that has brought.
She gave perfectly valid reasons for changing her mind, talking of a solid platform that is needed both pre- and post-Brexit.
A cynic (and there are plenty in all political circles) would suggest that she accepted the more hawkish view of some of her colleagues. She decided to show no mercy to Labour, a party on its knees riven with internal wrangling and struggling to find a socialist platform fit for the twenty-first century.
The decision is not without risks. The Conservatives are likely to take back a few marginal seats lost to Labour in the last election but some resurgence is likely form the Liberal Democrats who suffered a rout in 2014. UKIP appears to be a spent force, destroyed by internal problems, its race run.
Sterling rose by 1.85% against the euro and by more than 3% against the dollar before settling back a little on profit taking.
Stability, particularly politically is one of the mainstays of a strong currency. Although the fall triggered by the Brexit vote hasn’t even been close to corrected, commentators are calling this a “game-changer” for the currency.
Elsewhere, Marine Le Pen reiterated her “vision” for France; taking her out of the single currency, re-introducing border controls and initiating Frexit referendum.
Given the turmoil France has suffered since Charlie Hebdo, it is a highly populist platform and one which could see her gain support. Emmanuel Macron is also a reformer but prefers to look at the EU as vital to France’s place in the world. He has said that Le Pen’s isolationist policies will weaken the French negotiating position, destroy the EU and create economic havoc in the country.
The North Korean crisis is no nearer solution with both sides continuing to dig their heels in. Mike Pence the U.S. Vice President, who is touring Asia, called for diplomatic pressure to be applied by America’s allies and China. This distinction was unlikely to have been missed by the Chinese government who remain dubious about US policy in Asia.
The JPY remains strong building a base for an attack on resistance at 108.20 that could open the way for a move back to the 102.00 area longer term.