Price action in major currencies was limited last week, with few major data surprises for markets to latch on, with the UK once again providing the bulk of the headlines. The Euro and the Kiwi were broadly unchanged.
The Australian Dollar, which slumped to a multi-year low on 17 May in trade-weighted terms, rebounded 0.5% last week, with signs of profit-taking on short positions as markets debate whether the RBA will cut rates 25bp at its June policy meeting.
Conversely, the Dollar, which had hit a year-to-date high on 17 May, gave back 0.4% and is now only 0.6% higher than a month ago. The biggest loser was once again Sterling which shed a further 0.5% with markets seemingly still concerned about the lingering risk that the UK could leave the EU without a deal.
Sterling has nevertheless reacted pretty well to Prime Minister May’s well telegraphed announcement on Friday that she would officially resign on 7th June and to the result of the European Parliament elections announced late last night. Sterling has appreciated by an aggregate 0.4% in the past three consecutive sessions but remains volatile intra-day.
The British ruling Conservative Party and main opposition Labour Party, as expected, performed very badly in the European Parliament elections, coming in fifth and third position, respectively, with 9.1% and 14.1% of the total UK vote. The Brexit Party, headed by former UKIP leader Nigel Farage, came top with 31.6% while the pro-leave Brexit party won 3.3%. The pro-remain parties – the Liberal Democrats (which came second with 20.3%), Green Party (12.1%), Scottish National Party (3.6%), Change UK (3.4%) and Plaid Cymru (1%) – won an aggregate 40.4% of the vote.
