Fed Speeches And Trump’s Global Tour In Focus

 | May 22, 2017 09:36AM ET

It’s been a relatively uneventful start to the week, with equity markets in Europe trading a little mixed while those in the US are expected to open flat. The FTSE is clearly the outperformer in the European session so far buoyed by both the weaker pound sterling and the gains in commodity markets.h3 GBP Weighed Down as May’s Poll Lead is Cut in Half/h3

The pound is coming under some pressure this morning, weighed down by comments from Brexit Secretary David Davis and polls over the weekend that showed the Conservatives lead over Labour has been slashed. Davis’ claim that the UK will quit talks with the EU if the reported Brexit bill isn’t revised lower appears to be putting some pressure on the currency. While the pound remains vulnerable to suggestions that talks could break down, I think this is just another case of people involved preparing for tough negotiations and threatening things they ultimately will try to avoid at all costs.

The polls released over the weekend may also be contributing to moves in the pound this morning, with the Conservatives lead over Labour having halved in some cases. A large majority for the Conservatives is viewed as beneficial by some when it comes to the Brexit negotiations as it gives them a strong mandate while enabling them to take a softer approach when necessary without having to rely on the support of some of the bigger eurosceptics in the party.

h3 GBP/USD Pares Friday’s Gains But EUR/GBP Looks More Bullish/h3

It is worth considering though that while sterling is among the worst performing currencies today, the loss against the dollar only equates to around half of the gains made on Friday.