FTSE slides as embattled PM May shelves Brexit withdrawal proposal

The FTSE index continues to slide. Currently, the FTSE index is trading at 7,249, down 1.2% on the day. There are no British events on Thursday. On Friday, the U.K. releases retail sales and CBI realized sales.

The turmoil surrounding Brexit continues to confound and worry investors. The blue-chip FTSE posted losses on Wednesday and the downturn has intensified on Thursday. There were reports that Prime Minister May was planning to resign on Friday, but a senior government official denied the story, saying May would host President Trump when he visits Britain in June. May’s days as Prime Minister appear numbered, as she is likely to be forced out by her Conservative party, as challenges to her leadership are growing by the day. May had hoped to present a withdrawal bill to parliament on June 4, but that has been delayed indefinitely.

Meanwhile, voters in all 28 EU countries (including the U.K.) will elect lawmakers to the European parliament. Key issues include the economic slowdown, Brexit and the rise in Euroskpeticism. Euro-skeptics increased their representation in parliament from 12% to 25% in the last election, and with the dramatic increase in strength of populist parties, this trend could well continue. The Brexit party, headed by Nigel Farage, is expected to do well, while the Conservatives could be trounced, adding to Prime Minister May’s woes.

There were no surprises from the Federal Reserve minutes. Fed policymakers continued to preach patience, stating that rates will likely remain unchanged for some time. The minutes indicated that although members are more optimistic about economic growth, they remain committed to maintaining current rate levels, given that inflation remains low. It should be noted that the policy meeting took place on May 1-2, one week before President Trump announced new tariffs on China, which has significantly escalated trade tensions between the U.S. and China.

The Fed minutes may have reinforced the central bank’s stance that no rate moves are planned until next year, but the markets don’t share this view, with many analysts expecting at least one rate cut in 2019. Lower U.S. rates could dampen enthusiasm for the U.S. dollar. The CME Group has priced in a 36% likelihood of a 25-point basis cut at the September meeting.

British pound sinks as end nears for May; Nothing new from FOMC Minutes

Sell May and go away

Crude prices tumble furthers

Economic Calendar

Thursday (May 23)

  • Day 1 – European Parliamentary Elections

Friday (May 24)

  • 4:30 British Retail Sales. Estimate -0.3%
  • 6:00 British CBI Realized Sales. Estimate 6

*All release times are DST

*Key events are in bold

FTSE, Thursday, May 23 at 9:25 DST

Previous Close: 7,334 Open: 7,300 High: 7,306 Low: 7,220 Close: 7,249

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Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.