Afternoon analysis 30.06.2016

, author:

Marcin Lipka

A surprising turn in the elections for the leader of the Tories, as well as the prime minister of United Kingdom. The jobless claims data from the USA remain at a low level. Inflation from Poland is close to the economists estimations. The zloty remains stable.

Johnson's unexpected resignation

In today's Daily analysis we have focused on the possible scenarios for the British political scene. We have referred to the most recent YouGov surveys. Their results indicate that the final clash for the chairman position in the Conservative Party, as well as the UK prime minister, will be between Theresa May and Boris Johnson. They represent two different views regarding Brexit.

However, it appeared in the early afternoon that Boris Johnson resigned from his candidacy. It is difficult to say, whether it was related to the previous announcement of Michael Gove's candidacy, who was Johnson's ally in the Brexit campaign. However, before noon Gove stated that, “Boris cannot be a leader, as well as build a team for the task that is ahead of us.”

For the time being, it seems that the fight within the Brexit supporters camps is in favor of Theresa May. However, does this mean that the risk of the UK leaving the European Union is actually decreasing? In her previous testimony May said that, “Brexit is Brexit, the campaign was tenacious, the voting occurred and the society has given the verdict.”

The Home Secretary continued that, “there should be no attempts of remaining within the EU, getting in again with the back door, or a second referendum. The country has voted to leave the European Union.” Thus, there should be no doubt that Theresa May will strive to fulfill the will of the majority. This is despite the fact that she supported the status quo.

Continuation of the Brexit procedure is the most likely scenario. However, we can claim as well that any scenario is possible. After a surprising result of the referendum, sudden changes within the Conservative Party, as well as the risk of the UK breakdown, the new parliament elections are possible. Their result may be used for making yet another referendum.

Low jobless claims in USA. Stable zloty

Apart from the weak payrolls reading from the beginning of June, there are no other signals that could confirm deteriorating situation in the American labor market. Today's data regarding jobless claims was near the consensus that is at the level of 268k. This level remains near to its minimum from many years.

The total amount of jobless claims remains slightly above the level of two millions. This is near the minimum from the break of the 1980s and 1990s. On the other hand, considering the Brexit related matters, as well as uncertainty regarding new workplaces in June, this data has basically no greater significance for the Federal Reserve nor the dollar.

The zloty wore-off slightly in the early afternoon. However, the EUR/PLN began to return to its morning levels right after the American session started. The zloty might have been supported by slightly higher inflation readings, as well as the fact that the American stock market sustains its high levels after the solid growths from the past few days. Moreover, it is likely that the market no longer anticipates a further downgrade by Standard & Poor's, during the review of Poland's loan credibility tomorrow.

This commentary is not a recommendation within the meaning of Regulation of the Minister of Finance of 19 October 2005. It has been prepared for information purposes only and should not serve as a basis for making any investment decisions. Neither the author nor the publisher can be held liable for investment decisions made on the basis of information contained in this commentary. Copying or duplicating this report without the written permission from Sp. z o.o is prohibited.

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