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We have seen continued GBP weakness as we head into June. There are increasing concerns surrounding Boris Johnson’s premiership as Conservatives MP’s take to parliament in order to conduct a vote of no confidence in Boris Johnson. Any uncertainty within the government will likely cause a currency to weaken. If after the vote takes place Boris Johnson is forced to leave his position then we could see massive GBP weakness as this would trigger a leadership contest and a possible election. Yet the rebels require over 180 votes for this to be possible if they are shy we could expect possible GBP recovery.
The Euro was off to a strong start against GBP this month due to pressure for Boris Johnson to resign. With the ongoing conflict within Ukraine and German inflation rates coming out today we could see some big swings either way. On Wednesday we have GDP figures coming out from the Eurostat. If the figures come out higher than expected then this shows growth in the economy which could strengthen the Euro however if the figures are lower than expected then this will weaken the Euro.
The US Dollar was off to a weaker start this month due to less risk sentiment in global markets. The UK is following the United states in sending their first long range missiles to the Ukraine which has helped to strengthen the US Dollar slightly as it has a possibility of escalating the conflict as the defence secretary has said. This will likely strengthen the dollar as in times of crisis its seen as a safe haven currency. We also have CPI figures coming out this Friday in the US. If the inflation figures come out higher than expected then we could see the dollar weaken, unless it so significant it signals a further rise in interest rates. If the figures come out lower then this will show that inflation is slowing down this will still be positive for the economy as well as naturally strengthening the value of a Pound.
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