Safe havens have strengthened across the board as the recent risk events have lifted markets’ risk off sentiment. Notably the London terror attack, gulf states cut diplomatic ties with Qatar, and the upcoming UK general election.
On Tuesday, June 6th, spot gold rallied 0.8%, hitting a high of $1289.55, last seen on April 19. JPY gained 0.8% to the USD with USD/JPY hitting a low of 109.55, last seen on April 21st. As a result USD/JPY broke the significant support line at 110.00 for the first time since the end of April. JPY gained 0.87% to the EUR with EUR/JPY hitting a 1-week low of 123.21.
US ISM non-manufacturing PMI for May was released yesterday at 56.9, lower than the expectations of 57.00 and the previous figure of 57.50. On Tuesday, June 6th, in early European session, the dollar index hit a new post US presidential election low of 96.47. It saw a subsequent rebound currently trading around 96.65.
The latest poll conducted by Guardian/ICM released on Monday June 5th, shows the Conservatives Party’s lead of 11%. The breakdown of the approval rating is: Tory 45%, Labour 34%, Liberal Democrats 8% & UKIP 5%. The release of the poll has provided some support to GBP. GBP/USD hit a 1-and-a-half-week high of 1.2949 on Tuesday morning during early European session.
Recent polls conducted by different institutions have shown various outcomes. Although the Conservative Party still has a lead over all parties, this lead ranges from 1% to 11%. The “poll of polls” released on May 31, showed the Tory’s lead at 9%, which appears to be a more objective figure, as the calculation was based on an average of all recent polls.
The Conservative Party is still expected to win the election; however, the victory seems to be less certain now. It would be surprising, although, not impossible for the Labour Party to win the final victory. Per YouGov’s seats forecasts released the end of May the Conservative Party might keep a narrow majority even after the election. In this situation, potential hurdles and disagreements from other parties over Brexit issues are foreseeable, which will likely result in the impending 2-year Brexit negotiation process being difficult and weighing on GBP’s prospects.
