The week began with much of the focus on the results from the French elections. The outcome in France is set to have implications for the UK as the victor – Emmanuel Macron – is an ardent Europhile, and it is likely he will side with Germany’s Angela Merkel and make negotiations difficult for Theresa May.
Attention will now turn to the UK general election on 8 June. Sterling remains positive as the Tories gained ground in local elections across Britain at the expense of Labour and UKIP. While this will not necessarily reflect the outcome of the election, it does point to a strengthening of the Tories’ position. Over the weekend, it was reported that May could extend her majority in the House of Commons to 100 seats.
Elsewhere, Halifax reported that UK house prices are ‘stagnating’. In the three months to April, prices fell by 0.2% – the first quarterly fall since November 2012. While this will be monitored by analysts for further signs of decline, it should be noted that house prices in the three months to April were 3.8% higher than in the same period a year ago.
Looking to the week ahead, the UK and BoE in particular will be under the spotlight. The event will be the BoE’s Super Thursday, where they will release their interest rate decision, quarterly inflation report, and an update on growth and inflation forecast.