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Sterling will stay under pressure

Sterling gave back early gains against the dollar to trade flat today, back under pressure after British general elections that yielded no clear majority for any party and threatened to undermine Brexit talks later this month.

Prime Minister Theresa May reappointed most of her ministers on Sunday but brought a Brexit campaigner and party rival into government to try to unite her Conservatives after a disastrous election. She is still negotiating for support from Northern Irish Unionists to allow her to stay in power.

It is hard to see sterling performing well over the summer given the possibility that the current state of political uncertainty could last for some time.

It seems fair to say that the consensus view on Friday within the markets was that the practical outcome from the UK general election would be the adoption of a softer negotiating stance by the UK government over Brexit. As a result, there is a view that this would prove mildly supportive for sterling.

 

 

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