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Speculations of a “hard Brexit” after the U.K. elections aftermath weighed on sterling as talks are scheduled to start next week. Prime Minister May has tried to assure Brits that it’s business as usual, but her political party has yet to establish a coalition government.

  • Italian industrial production down by 0.4% versus projected 0.2% rise
  • Moody’s: U.K. hung parliament to complicate and delay Brexit
  • Brexit Minister Davis: Negotiations to proceed despite election results
  • Davis: Looking at contingency plans to leave EU without a deal
  • Davis: EU likely to take U.K. out of the single market for immigration reforms

Major Events/Reports

Brexit back in the spotlight

With the U.K. elections out of the way, politicians are getting back to business as Brexit talks are scheduled to begin next week. Unfortunately for Theresa May, this is much easier said than done since she hasn’t been able to finalize a coalition with the DUP just yet and her stint as Prime Minister hangs in the balance.

According to DUP leader Arlene Foster, their political party’s priority is to defend the U.K. and get a good Brexit deal. Analysts have warned that this party from Northern Ireland could have a number of budget-related demands for May as a price to pay for granting a coalition government.

Meanwhile, Brexit minister Davis has tried to be more cheery in assuring that the negotiating team will still try to get the best possible deal. He did say that the EU will likely to kick the U.K. out of the single market if it insists on immigration reforms, but he also noted that they have the option to walk out without any deal at all.

Brits are hoping to get more clarity and reassurance from the Queen’s speech on June 19 and the next season of “The Crown” in November.

Stronger political stability in France

In another part of Europe, political stability is the name of the game as French President Macron’s party had a stellar run in the first round of legislative elections.

Macron’s Republic on the Move! political party scored 28% of the votes while Republicans chalked up only 16% and the National Front ended up with 14%. Number-crunchers predict that Macron’s group is slated to win around 400 of the 577 seats during the second run-off on June 18.

This means that the government will have an absolute majority in parliament, which means that reforms and new legislation could be passed smoothly. It also represents quite a turnaround in French politics, which has been dominated by either Republicans or Socialists for decades.

European markets close mixed

Even with the political shakeup in the U.K. and a bit more stability in France, the FTSE is in the green while other European indices closed lower.

  • The FTSE 100 is up 5.67 points to 7,533.00 (+0.04%)
  • German DAX is down 107.72 points to 12,708.00 (-0.83%)
  • French CAC 40 is down 46.21 points to 5,253.65 (-0.87%)

U.S. equity futures point to risk-off moves in the next few hours:

  • S&P 500 index futures are down 0.13%
  • Dow 30 index futures are lower by 0.11%
  • Nasdaq futures are down 0.70%

Major Market Mover(s):


The pound resumed its post-election slump as market watchers brace themselves for a gloomy Brexit outlook.

GBP/USD is down 75 pips to 1.2674 (-0.57%), GBP/JPY edged 128 pips down to 139.33 (-0.90%), GBP/CAD fell from 1.7115 to 1.7078 (-0.76%), and GBP/NZD is down to 1.7603 (-0.36%).


On the flip side, the yen managed to squeeze out gains as risk-off moves were seen for the most part of the day.

USD/JPY is down 36 pips to 109.97 (-0.33%), EUR/JPY fell 15 pips to 123.34 (-0.12%), NZD/JPY is lower by 41 pips to 79.14 (-0.53%), and CAD/JPY slid from 81.96 to 81.81 (-0.13%).

Watch Out For:

  • 7:00 pm GMT: U.S. Federal budget balance ($87.3B deficit expected vs. $182.4B previous surplus)