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Boris faces no-confidence vote

Stock markets are off to a decent start this week with Europe posting almost 2% gains and the US not far behind.

Fluctuations in the markets are so frequent and large that I struggle to get particularly excited about days like today. On the face of it, these are very decent gains. But what exactly has changed? There’s far more to be concerned about than optimistic at this point and that’s going to be a constant challenge to any of these bear market rallies.

The next couple of weeks could be huge for market sentiment going into the summer, from the ECB rate decision on Thursday to US inflation on Friday and the Fed meeting next week. A lot has been priced into the markets when it comes to interest rates but it may still not be enough. And there’s perhaps a bit of denial about the economic prospects, especially if inflation falls at a much slower rate.

 

GBP higher ahead of no-confidence vote

The pound is one of the better-performing currencies in FX markets at the start of the week which may come as a surprise to some given the no-confidence vote on Prime Minister Boris Johnson that was confirmed earlier in the day. Political instability isn’t something that is typically positive for a country and its currency but a look at the odds ahead of the vote probably tells you everything you need to know. ​

Interestingly, the biggest winner of this evening’s no-confidence vote could be Boris, himself. The Prime Minister will no doubt consider a vote in his favour as drawing a line under the whole partygate scandal – even if plenty of others disagree – and he’ll be free of another challenge for at least 12 months. Who knows, he may well be pleased with the vote being triggered, even feel emboldened if he wins, as expected.

 

Bitcoin remains in consolidation

Bitcoin is back above USD 30,000 and up around 5% on the day. And yet, I don’t think we’re any the wiser on the path of travel for the cryptocurrency in the days and weeks ahead. It’s been in consolidation for many weeks now in a pattern that looks more bearish than bullish on the face of it but as we’ve seen before, once the recovery fully takes hold, the rally can be as explosive as it was unexpected. One thing that’s against it is the near-term prospects for risk assets more broadly and like with those, it could be a big ten days.

 

For a look at all of today’s economic events, check out our economic calendar: www.marketpulse.com/economic-events/ [1]

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam [5]

Senior Market Analyst, UK & EMEA at OANDA [6]
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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