The hottest day of the year was a quiet affair for sterling, but a political earthquake for the country, as Reform won a parliamentary by-election (something UKIP never managed) and appears to be on course to break the traditional two-party system, with more local council wins than any other party.
For sterling, three weeks of steady rises against the euro continued, having strengthened some 3% since the low of mid-April and a similar amount for GBP/USD.
The markets tend not to like political upheaval, but with a general election several years away, more influential will be political events overseas. The latest on Trump tariffs looks to be a €50bn trade deal between the EU and USA, according to a report in the FT.
In the meantime, claims for unemployment benefits in the US rose by 18,000 last week. A more influential measure will be Non-Farm Payrolls this afternoon, if evidence grows that the US is heading into recession.
Yesterday MacDonalds announced a drop in US sales, which it blamed on consumer uncertainty. General Motors said that Trump tariffs would cost it $5bn this year and Apple said they would cost it $1bn. Even so, GM’s CEO said she was “grateful to President Trump for his support of the US automotive industry”.
In the UK yesterday, British mortgage borrowing hit its highest level in four years. However, this was something of a blip as people sought to beat a stamp duty tax rise.
Next week is the Bank of England’s interest rate decision, with a 25-basis point cut to 4.25% now the predicted outcome on Thursday.
In the eurozone, we are about to get a flash inflation reading, with a small drop to 2.1% expected, as well as unemployment.
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Please note, Smart Currency will be closed on Monday 5th May for the UK’s Spring Bank Holiday.
