In the end the polls measuring voter intention before the UK General Election have proved to be totally incorrect and now we are more certain that some form of stable government will be formed, similar to last September following the Scottish referendum on independence, the financial markets have breathed yet another sigh of relief. Not only has sterling jumped significantly gaining over 1% against the dollar and over 1.5% against the euro, but the FTSE 100 is expected to open higher recapturing the 7000 level. With an initial reaction of relief for investors, attention will now turn to what the future holds and it’s unlikely to be long before the focus shifts to a referendum on the UK’s membership of the EU in two years time. This could keep a cap on further gains for sterling and already we’ve seen some gains in GBPUSD given back with a high of 1.5523 earlier this morning and now trading at 1.5415 at the time of writing.
As the election hysteria dwindles we can turn our attention to other important market events today with the release of US employment data. The headline nonfarm payroll number is expected to come in at 224k and the unemployment rate due to fall to 5.4%, in this the penultimate release ahead of the next key FOMC interest decision on 17th June. There is still a minority who expect the first rate hike to come next month, but judging how Wednesday’s ADP figure went we are going to have to see two very strong nonfarm payrolls today ahead of then.