Rates as of 0500 GMT
This is one day when I dont have to scramble to find out what was moving the FX marketFollowing the UK local elections, which resulted in a big Conservative Party victory GBP and the failure of the Scottish National Party to win an outright majority GBP , the government announced it would start relaxing virus restrictions on schedule from May 17th GBP . The Daily Mail headline was The Return of Casual Sex!! GBPUSD rose back above the 1.40 level.
The rally could continue today. The Queens Speech today, in which Her Majesty reads out a speech laying out the governments plans for the next session of Parliament, will contain one particularly interesting item the repeal of the FixedTerm Parliament Act 2011 FTPA. It used to be that UK prime ministers had to call an election at least once every five years, but could call one earlier if they wanted. By controlling the timing of an election, the incumbent gained a big advantage. But under the FTPA, elections are held every five years on schedule, thus eliminating this opportunity. By repealing the bill, PM Johnson can then call an early election while the Labour Party is on the ropes, as last weeks election showed, and further cement Conservative control over the government.
Tomorrows UK shortterm indicator day will then set the tone for GBP. If Q1 GDP beats estimates, look for GBP to rally further; but if it only meets or misses estimates, we could see some profittaking see below.