Sterling was the star winner last week as boosted by renewed hope of a Brexit deal between the government and opposition. Poor results for both Conservatives and Labours are piling pressure on both parties to end the Brexit standoff and drama as soon as possible. In short, Conservatives lost more than 1300 seats. But despite the results, Labour didn't gain anything, but instead lost around 80 seats. That's seen as a wake up call to the two major parties on how deeply the public is dissatisfied by them. Prime Minister Theresa May stepped up calls on Labour leader Jeremy Corbyn to agree on a cross-party deal to leave the EU. May said in a Sunday newspaper party: “To the Leader of the Opposition I say this: Let’s listen to what the voters said in the local elections and put our differences aside for a moment. Let’s do a deal". May is expected to offer new concessions to Labour as talks with restart on coming Tuesday. It's perceived that both sides are getting closer and closer and a deal could be done within days. New economic projections as presented in the quarterly Inflation Report was somewhat Sterling neutral. BoE voted unanimously to leave the Bank rate unchanged at 0.75% and the asset purchase program at GBP 435B . Besides see the economy to expand +0.5% in 1Q19, up from +0.2% in 4Q18, the staff has upgraded GDP growth in 2019 through 2020. The unemployment rate is expected to fall further from the current multi-decade low level. Meanwhile, inflation forecasts were revised lower. Economic data from UK were generally positive but could be due to pre-Brexit stockpiling mainly. Q1 GDP rose 0.5% qoq versus expectation of 0.2% qoq. PMI manufacturing dropped to 53.1, down from 55.1 in April. But construction PMI rose to 50.5, up from 49.7. Services PMI also rose to 50.4, up from 48.9. |
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