British Pound Tumbles

With the prospect of no party securing a majority in the British parliament, the country has plunged into uncertainty less than two weeks before key “Brexit” talks are scheduled to start.

Multiple parties hammering out a coalition government looks the most likely outcome. Investors fear this could potentially delay negotiations with the European Union, however, a cross party compromise could also lead to a softer Brexit.

This may ultimately turn out to be positive for financial markets, which have always favoured retention of the single market. Analysts believe that a political risk premium will hang over the sterling until the volatility fades.

This should put a near-term ceiling on the currency. GBPJPY shed as much as 2.00% to last trade around 140.150.

Consumer inflation in China accelerated moderately in May, as non-food prices continued to remain elevated, according to official data released Friday. The consumer price index edged 1.50% higher from a year earlier, versus the 1.20% gain in April. Non-food prices increased 2.30% year-over-year, compared with 2.40% in April. The headline inflation figure matched a 1.50% forecast by economists surveyed by The Wall Street Journal. On a monthly basis, the CPI fell 0.10% in May, the National Bureau of Statistics said. In April, it rose 0.10% from the prior month. Separately, Chinese producer prices gained for a ninth straight month, climbing 5.50% on the year in May. The reading for factory inflation also matched the consensus economist forecast. USDCNH is rising Friday to trade around the 6.78800-mark.