First talks held within new British coalition government
Britain’s new government is to sit down for its first cabinet meeting this morning. We are expected to hear plans about new junior appointments which will include members of the Liberal Democrats party.
The two pressing matters to feature on the agenda include alterations to the current immigration and national security policies. Theresa May (previously Shadow Secretary of State for Work and Pensions and Minister for Women) has spoken out about the challenges the new coalition government will face when having to compromise on certain issues. However, Nick Clegg maintains that the coalition ‘will work’.
Pound Sterling – UK Markets
Following investor speculation, the Pound today appears to have continued its steady improvement against the USD. This is on the back of expected cuts in public debt. However, David Cameron was on-hand to point-out that we are still in the ‘honeymoon period’, having just formed a new government, and that we must be cautious. The Pound had recently suffered due to governmental uncertainty so it is natural that now a new government has been formed this issue should have eased slightly.
Although figures released today show that consumer confidence had increased slightly in April, expected fiscal tightening may well cancel this out over the next 6 months.
GBP/EUR rates remained favourable and although we are no longer at the one year high of last Friday, as of GMT 09:15 the rate was 1.17440.
Be aware that even if the Pound may have somewhat steadied, we are still in unpredictable times.
US Dollar – US Markets
Recent figures have shown that the US trade deficit widened by 2.5% in March to $40.4bn. Rising consumer confidence in conjunction with increasing oil prices resulted in a 40% increase in the past year. Whilst this reflects well on the economy, it will do little to aid GDP.
With little movement in the markets, the USD today consolidated its position as a safe haven currency in an uncertain global economy.
Euro – European Markets
Slightly amusing reports surfacing from the markets this morning are saying that the Euro is ‘taking a rest’ after a rough couple of weeks. Although the currency remains very weak against all major counterparts, overnight stability has allowed all those involved to take a much needed break. However, concern still surrounds the state of the Spanish economy following their plans to cut the deficit to 4.7% of GDP by the end of 2011.
As of GMT 10:00 the EUR/USD mid-market rate steadied itself at 1.25900. It is yet to be seen how recent events in the continent will unravel so it would be best advised to speak to your currency broker to get an inside perspective.
Other Currencies – Highlights
The South African Rand today continued its strong form against the USD for the fifth consecutive day on the back of reports that the central bank will keep interest rates at their lowest levels in 12 years. The seventh rate cut since December 2008 is a continuous attempt to increase consumer confidence and pull the country out of its first recession in 17 years.
Better than expected jobs data showed that Australian employment levels hit a record 11 million in April. Increased appetite for domestic product meant that the local currency is currently much sought after.