he House of Commons comfortably passed the motion, with just 13 of the 535 votes cast opposing the proposal. While some may argue the prospect of an election ramps up political uncertainty in already uncertain times, with May’s Conservative Party currently holding a 21 point lead in the polls, generating a stronger foothold within her own party is almost entirely assured.

Gains for the Euro on Wednesday were capped by ongoing concerns regarding the French Presidential Election this Sunday. With National Front leader Marine Le Pen and far-left candidate Jean-Luc Melenchon both polling well ahead of the vote there is now a realistic, albeit slim, chance that both populist candidates will make it through to the run-off election next month. As we have outlined in our most recent French Presidential Election report, we would expect to see a sizable sell-off in the Euro of up to 5% in the immediate aftermath of the vote should this be the case.

Meanwhile, the Dollar received some decent support from US Treasury Secretary Steven Mnuchin who backtracked on comments made by Donald Trump last week. Mnuchin claimed that Trump was “absolutely not trying to talk down the Dollar”, despite suggesting that it was “too strong” in value. However, the US Dollar clearly remains on the back foot following recent underwhelming economic data, reflected by the implied probability of a June interest rate hike by the Federal Reserve falling to just 40% in the past few days.

Major currencies in detail

GBP

Sterling continued to remain fairly well supported yesterday, a day after Theresa May’s surprise decision to call for a snap election. The prospect of a strong majority government has spurred hope of a slightly longer period of negotiations with the European Union and, ultimately, a softer Brexit. Theresa May spoke again yesterday, claiming that the election would provide long term stability, while she again ruled out the possibility of a second referendum on EU membership.

Governor of the Bank of England Mark Carney will be speaking in Washington this afternoon. We expect Carney to remain fairly tight lipped on the topic of monetary policy ahead of the central bank’s next monetary policy meeting on 11th May.

EUR

Updated inflation out of the Eurozone came in right in line with expectations on Wednesday. Consumer prices grew by 1.5% in the year to March, still comfortably below the ECB’s “close to but below 2%” target. We think ECB President Draghi is likely to sound a slightly less hawkish note at the central bank’s next week’s meeting on Thursday as a result of the elusive reflationary trend.

The monthly consumer confidence index from the European Commission will be released at 15:00 UK time. We await the business sentiment PMI’s on Friday as the most significant economic announcement in the Eurozone this week.

USD

The Dollar remained on the back foot yesterday, with last week’s poor inflation and retail sales figures continuing to dampen sentiment towards the currency ahead of the Federal Reserve’s next monetary policy meeting at the beginning of next month. With last month’s weak labour report and inflation numbers still ringing in the ears of policymakers in the US, we think the FOMC is almost certain to hold rates steady when it next meets in May.

Jobless claims will be the only economic data release of any significance today. US Treasury Secretary Mnuchin will be speaking again this evening after UK close.