Snap Election Fears Hit Sterling

Sterling has strengthened against the euro this morning after some volatile trading over the weekend.

In overnight trade on Friday into Saturday, the pound pushed towards 1.06 against the euro.

We’ve seen a rapid decline in the pound in the last three months. In early May, it was trading above 1.17.

UK data this week, of which there’s plenty, may provide some distraction, particularly in light of last week’s GDP reading which put the country at risk of recession just before the (Brexit) deadline. UK Retail Sales, Inflation and also Jobs data will all be released, this will be watched closely and give a good indication as to which way we are heading as an economy.

Figures on Friday showed that the UK economy had contracted in the second three months of the year for the first time since 2012.

If that level of weakness continues into the current quarter, the UK economy would be in a technical recession.

Over the weekend there was more volatility for Sterling as noises of a snap election became louder.

The fastest possible time where they could hold a snap election would start with the Labour party proposing a no-confidence motion on September 3, if that’s the case even then the earliest an election could be held would be on October 26 assuming Johnson broke with the tradition of having an election on Thursdays.

If he stuck to the tradition the soonest an election could be held would be on October 31 which is Brexit day. So, the chances of this happening before the deadline are slim.

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