Election Result surges Sterling currency

Paresh Davdra is the Dealing Director of RationalFX, Currency Specialists. Tuesday 12th May 2015 08:49 EDT

On Friday 8th May, news emerged of Prime Minister David Cameron winning Britain's election, confounding poll predictions that the vote would be the closest in decades to sweep into office for another five years with a clear majority and his Labour opponents in tatters. The sterling currency, bonds and shares surged on a result that reversed near-universal expectations of an inconclusive "hung parliament", in which Cameron would have had to jockey for power with Labour rival Ed Miliband.

Instead, Cameron met Queen Elizabeth at Buckingham Palace to accept a mandate to form the first majority Conservative government since John Major's surprise victory in 1992. Despite the unexpectedly decisive outcome, longer-term uncertainty looms over whether Britain will stay in the European Union - and even hold together as a country. Secessionists swept the board in Scotland, and Cameron repeated a promise to hold a referendum on membership in the EU.

The anti-EU, populist UK Independence Party (UKIP) surged into third place in the overall vote tally, but disappointed its followers by managing to place first in only one district to win just a single seat. Like Labour's Miliband, Lib-Dem leader Nick Clegg and UKIP leader Nigel Farage resigned as party leaders.

Cameron's victory means Britain will face a vote which he has promised on continued membership in the EU. He says he wants to stay in the bloc, but only if he can renegotiate Britain's relationship with Brussels. Jean-Claude Juncker, president of the EU's executive European Commission, congratulated Cameron on his victory. The Commission would examine any British proposal "in a polite, friendly and objective way," a Commission spokesman said.

Payrolls rebounded in April, a sign companies are confident the U.S. economy will reboot after stagnating early this year. The unemployment rate dropped to 5.4 percent. The jobless rate fell to the lowest since May 2008 as more Americans entered the labour force and found work. Average hourly earnings climbed less than forecast.

Construction and health care were among the industries that accelerated the pace of hiring last month as the economy emerged from temporary setbacks that included bad weather and a labour dispute at West Coast ports. Such job growth and steadily rising wages may keep the Federal Reserve on track to raise its benchmark interest rate later this year. Construction companies took on 45,000 workers in April, the biggest gain since January 2014. Employment in health services increased 55,600 in April, the strongest increase in five months.

Fed Chair Janet Yellen and her colleagues will use the data to help them parse the strength of the economy as they consider raising interest rates for the first time since 2006. Officials, who dropped a promise in March to be patient on raising rates, say they can act at any policy meeting, beginning with their gathering on June 16-17. Most expect them to move later this year.

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