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After seven long weeks of campaigning the UK general election is now only days away and, depending on which poll you take into consideration, the race is either becoming too-close-to-call or is all but over. But it’s not just the election that will influence foreign exchange markets this week. In fact, there are several other key events also taking place on Thursday that could have just as much of an impact on FX space. But first, the headline event.
The UK snap general election, called on 18 April, was always meant to be a procession for the Conservative party. Prime Minister Theresa May enjoyed the largest poll lead over the opposition coming into an election of any sitting government in history. However, in the past fortnight, polls have shown that the Labour Party has greatly increased its share of support.
Having been 20 points behind the Tories on the day of the election announcement, Jeremy Corbyn’s party is now only a handful of points behind and could even force a hung parliament, according to YouGov. However, other polls – including a Monday release by ICM – continue to give the Conservatives a double-digit lead which would likely see May’s party increase their parliamentary majority.
Such a victory would likely see Sterling rally as investors believe the sitting government to have a more coordinated plan for Brexit negotiations than the opposition. By that logic, a win for Corbyn et al would see Sterling sell-off as an unknown ruling entity enters Downing Street, while a victory for the Conservatives with a smaller majority than expected may have the same effect.
While the US election took place over seven months ago, there is potential for ex-FBI Director James Comey’s testimony to the the Senate intelligence committee on Thursday to have enormous implications for the US dollar. Comey, who was fired by President Trump last month under dubious circumstances, will be given a chance to reveal more details of just why it was he was terminated from his role, and may even give evidence that Trump attempted to coerce him into dropping an investigation into General Mike Flynn, the former National Security Adviser.
Such an allegation would renew concerns over Trump’s Presidency and would likely see confidence in the US dollar fall ahead of next week’s Federal Reserve policy meeting. However, the ex-Director may choose to hold his tongue, or even reveal a turn of events that are contrary to popular belief. Both of these situations may instead provide the greenback a boost.
But it’s not just politics that dominates the calendar on Thursday, as European Central Bank policymakers meet in Estonia for their latest monetary policy update. While reports emerged at the beginning of last week that Mario Draghi and the rest of the Governing Council may begin to discuss the possible removal of accommodative policy, weak data prints throughout the rest of the week may have lessened the probability of its occurrence. However, with the multitude of events that are also taking place on Thursday, it may offer the perfect opportunity to reduce the potential impact on the Euro.
Data-wise, the third reading of Eurozone GDP (Wednesday; 10am), whilst unlikely to deviate from previous prints, a surprise would move the Euro, while Industrial & Manufacturing Production (Friday; 9:30am) and the NISER GDP Estimate (Friday 3pm) would likely have to provide significant figures to the upside or downside for it to supersede the influence of the election result.
Key data this week (Sign up here to receive our daily live macro-calendar)
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UK Economic Announcements
00:01 BRC LfL Sales
Intl Economic Announcements
05:30 RBA Monetary Policy Update (AUS)
8:45-9am Services PMI (European, various)
09:30 Sentix Consumer Confidence (EZ)
10:00 Retail Sales (EZ/FR)
15:00 IBD/TIPP Economic Optimism, JOLTs Job Openings (US)
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UK Economic Announcements
08:30 Halifax House Price Index
Intl Economic Announcements
02:30 GDP (AUS)
06:00 Leading Economic Index (JP)
07:00 Factory Orders (DE)
08:30 Construction PMI (DE)
09:10 Retail PMI (European, various)
10:00 GDP (EZ)
10:00 OECD Economic Outlook (World)
12:00 MBA Mortgage Applications (US)
15:30 Oil Inventories (US)
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UK Economic Announcements
ALL DAY – UK GENERAL ELECTION
00:00 RICS House Price Balance
09:30 Consumer Inflation Expectations
Intl Economic Announcements
00:50 GDP (JP)
03:00 Exports/Imports (CN)
07:00 Industrial Production (DE)
12:45 ECB Monetary Policy Update (EZ)
13:30 ECB’s Mario Draghi Press Conference
13:30 Weekly Jobless Claims (US)
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UK Economic Announcements
09:30 Construction, Industrial & Manufacturing Production, Trade Balance
15:00 NIESR GDP Estimate
Intl Economic Announcements
02:30 CPI, PPI (CN)
07:00 Trade balance (DE)
15:00 Wholesale Inventories (US)
18:00 Baker Hughes Rig Count (US)
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