Turkish lira made a spectacular decline during the recent trading days…
Thursday's triple ripple effect: UK elections, Comey's testimony and ECB meeting
This is all about this Thursday when the UK general election together with the ECB monetary policy meeting will be held and James Comey will testify before Congress on whether Trump pressured him to end the Russian probe into Michael Flynn or not.
The UK elections
There are three scenarios of how this election may unfold
Conservatives win a solid majority of votes. The following result will accord at least modest relief for the British pound.
Conservatives do secure victory but without a material improvement in their majority. The undertone for GBP in this scenario will be negative.
A hung parliament with no party having an absolute majority of votes. If the following scenario materializes, the immediate pound’s reaction will be negative.
At around 10 pm GMT +1 voting ends across the UK and broadcaster release their exit poll. Normally, they are quite good at predicting the actual results. The exit poll of the 2015 general election showed that David Cameron was on course to remain Prime Minister with the Tories as the biggest party in parliament. This was an accurate prediction. 4 am GMT +1 will be probably the busiest time for traders, as the shape of the new parliament should be already clear unless the parties have the equal share of votes.
At 7 am GMT+3 the latest result of the election will be announced. It will be almost over, as there will only six more results to appear till noon. By that time, we will already know who is the prime minister and what is the form of the new cabinet.
The ECB monetary policy meeting
The European Central Bank is set to deliver its interest rate and monetary policy statement at 2:45 pm MT time. Many analysts expect the ECB to upgrade its risk around the Eurozone economic recovery to balanced. Notwithstanding the solid economic data, the ECB may sound a less hawkish and more dovish given the fact that underlying inflation pressures remain subdued. If this eventuates, the euro will be titled to the downside taking into account already hawkish market expectations. But the euro’s slide wouldn’t be extensive as the USD on Thursday will likely remain weak as well because of James Comey testimony.
James Comey’s testimony on Russia
Former FBI Director James Comey is poised to testify before the US Senate intelligence committee. He will answer the question about Russian interference in the last year presidential election. Comey’s testimony is scheduled to begin at 10 am Eastern time (6 pm MT time).
Last month, the New York Times alleged that Trump had asked Comey to drop an FBI investigation into possible links of his former national security advisor Michael Flynn with Russian entities. This was regarded by lawyers as an obstruction of justice – an impeachable offense. If allegations are confirmed by Comey, the USD will be hurt.
Oil is always the hottest topic. Other markets may be steady, however, the oil one never is.
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