Britain in Shock after London Terror Attacks
Sterling’s fluctuations are overshadowed by the horrific terrorist attack at London Bridge and Borough Market, on Saturday night. Three men, armed with knives, carried out a stabbing spree killing seven people and injuring at least forty-eight, some of them critically. Armed police officers shot dead the attackers who, according to witnesses, were shouting “this is for Allah.” Counter terrorism police units have raided several houses, trying to gather information regarding the attack.
In the Middle East, old allies became rivals when a group of Gulf countries and Egypt decided to cut diplomatic relations with Qatar. Qatar was accused of collaborating with Islamist terrorist groups, aiming to destabilise the region. The dramatic developments made the price of oil jump and sent Qatar’s stock market tumbling by 6%.
Pound Sterling – UK Markets
Today, Sterling increased its value against the Euro with the exchange rate set at €1.14. The British Pound strengthened against the US Dollar, trading at $1.29. The Pound is expected to fluctuate this week due to political uncertainty caused by Thursday’s general election.
Political parties have decided to resume their election campaigns today, just three days before the parliamentary elections. Jeremy Corbyn and Tim Farron are expected to challenge Theresa May over cuts in the police budget and the government’s relations with Saudi Arabia.
Saturday’s attack was the third terrorist incident on British soil, in just ten weeks. Prime minister Theresa May chaired an emergency Cobra meeting in order to be informed by security and intelligence officials. May condemned the “evil” ideology behind the terrorist attack and said that the UK “cannot and must not pretend that things can continue as they are”, having decided to set out tough measures to tackle terrorism. Theresa May vowed to eradicate all existing online “safe places” that help terrorism grow.
Police believe that they know the identities of the terrorists, but have refused to reveal them because of ongoing investigations that could jeopardised. ISIS claimed responsibility for the attack on its main communication channel, but this still hasn’t been verified.
US Dollar – US Markets
The US Dollar remained stable against the Euro, with the exchange rate between the two currencies set at €0.88. On Friday, the US employment report released made the US currency sink against its major competitors to its lowest level since the presidential election in November.
Although the disappointing Non-Farm Payrolls report came out below expectations, suggesting that the labour market is losing momentum, some market analysts believe that the data was not sufficiently bad to cancel the Fed’s plan to raise its interest rates. They express the opinion that the Federal Reserve will take into consideration that Non-Farm Payrolls increased for an 80th consecutive month, an achievement never seen before in the US economy.
Oil prices jumped when a group of Persian Gulf states, including Saudi Arabia, Bahrain, United Arab Emirates and Egypt announced their decision to cut diplomatic relations with Qatar, accusing it of funding terrorism in the region through its support for Islamist groups. The Gulf crisis sent the price of Brent crude oil to $50.42 per barrel, after having dropped below $50 on Friday.
Euro – European Markets
The Euro lost a bit of ground against the US Dollar, losing 0.15% in value, trading at $1.12. The single market currency didn’t strengthen, despite the upbeat economic data released regarding the growth of the Eurozone’s private sector.
According to May’s survey, the Eurozone’s private sector kept growing in the fastest pace since the financial crisis hit the old continent. Economists suggest that the regional economy is entering a new stage of growth, since the activity at the service and manufacturing sector was the highest in the last six years. “The final PMI readings add to mounting evidence that the Eurozone is enjoying a strong second quarter, consistent with GDP rising at 0.7% rate. Encouragingly, both the hard data and the surveys are revealing a broad-based upturn,” said Chris Williamson, chief business economist at IHS Markit.
Other Currencies – Highlights
Sterling slipped against the Australian Dollar, losing 0.4% in value and trading at 1.72 AUD. The Australian Business Indicators survey for the first quarter of 2017, which was published earlier, has caused the Aussie’s rise. Economists at Westpac said that the provided information constituted a generally positive update. The survey revealed that the Australian economy has received an income boost from the rise in commodity prices. Company profits increased over the past six months, but economists are concerned that sluggish wage incomes are constraining consumer spending.
The Pound strengthened against the New Zealand Dollar, with the exchange rate set at 1.80 NZD. New Zealanders are having their “Queen’s Birthday” holiday today, so the absence of economic data leaves the analysts waiting for Tuesday’s Global Dairy Trade auction, which is linked with the fixing of dairy prices. May’s car registrations in the country were the highest ever recorded, indicating that the car market growth is sustainable and shows every sign of continuing.