Theresa May walked onto the stage yesterday to the tune of ABBA’s Dancing Queen in a self-deprecating reference to her recent trip to Africa. Last year, she spoke against a backdrop that crumbled behind her, but this time around, it was arguably worse – 30 minutes before May spoke, the Conservative MP James Duddridge confirmed that he had submitted a letter to Sir Graham Brady, the Chairman of the Backbench 1922 Committee, demanding a vote of no confidence in the Prime Minister. There is speculation that this brings the total amount of letters calling for a vote of no confidence to 36, but nobody is certain.
The Prime Minister’s approach to delivering the speech was to single Jeremy Corbyn out for attack, as she repeatedly referred to Labour as ‘the Jeremy Corbyn party’. It is not known whether the ploy will work, but it could perhaps be seen as indicative of senior Conservatives regarding Labour as an electoral threat. One of the more headline-grabbing statements was her assertion that austerity is over following almost ten years of cuts to public services. It is not yet clear how the government will find more cash.
There was virtually no response to May’s speech on the currency markets, although sterling did pick up a little as the afternoon progressed. The general consensus is that not much new was said by May and investors might well be awaiting further clarification on whether anyone will take a chance on a challenge to her leadership. As we approach the deadline for Brexit, it is becoming more and more vital that a single government position is established. As it stands, that looks unlikely.
UK services PMI came in slightly below expectations, while there was a much-needed breakthrough in the Italy budget row. The news helped boost the markets, with the Dow Jones industrial average hitting its highest mark ever. There appears to be so much happening from one day to the next that writing this note is more a case of what to leave out, as opposed to what to discuss. We are spoiled for choice – but this is not necessarily a good thing.
We were speaking yesterday and realised that a lot of what we read about Brexit appears to simplify the situation to absurd degrees. While the government continues to argue over whether the Chequers plan is the best route forward, it is easy to forget that the EU has already rejected it. It is difficult to overstate just how much more work needs to be done before a deal can be agreed. Opinion is divided on which is the most likely: a deal agreed in time, a deal almost agreed, so we extend the deadline, or we leave without a deal.
Unfortunately, we don’t have a crystal ball and, unless you do, the best thing you can do is to speak to your Personal Trader about how a forward contract can help you lock in your exchange rate. Give them a ring on 020 7898 0541.
