24/05/2017 - Election Campaigning Suspended After Tragic Bombing

GBP

Sterling stayed subdued on Tuesday, hovering below seven month-highs against the dollar as investors awaited further developments in Britain's suspended election campaign after a suicide bombing rocked the city of Manchester. Following the events; Britain’s main political parties agreed to suspend campaigning ahead of the June 8 election until further notice following Monday night's explosion in Manchester that killed 22 people at a concert.

Analysts said that had put investors in a "wait and see" mood after polls over the weekend showed Prime Minister Theresa May's Conservative Party's lead narrowing over the opposition Labour Party. Sterling has gained nearly 4 percent since May surprised financial markets with her April announcement of a general election in June, prompting speculators to trim record high bets against the pound.

There were further signs that consumer spending - a main driver of Britain's economy -- is wilting in the face of inflation driven by the pound's almost 20 percent fall since last year's Brexit vote. Data showed Britain's budget deficit widened by more than expected at the start of the new financial year as value-added tax revenues flatlined. A separate survey meanwhile showed retail sales growth faded away this month after an April surge as worries about the outlook among major chains increased at the fastest rate since 2012.

USD

The dollar struggled to recover ground against other major currencies on Tuesday as lingering U.S. political risk and strong European data kept the greenback in check.

Worries over U.S. President Donald Trump's recent firing of FBI Director James Comey, who was overseeing a probe into possible links between the president's team and Russia, and concerns about possible delays in Trump's efforts to implement his economic stimulus plans have recently pressured the dollar.

On Tuesday, U.S. Treasury Secretary Steven Mnuchin said while he hopes to get tax reform done this year, it will not happen by August.

Key Announcements 

13.45 – EUR – ECB President Draghi Speaks; Speaking at the Bank of Spain

15.30 – USD – Crude Oil Inventories

19.00 – USD – FOMC Meeting Minutes