GBP: Stabilizing after post-election markdown - BBH

Sterling is stabilizing after the post-election markdown as the PM May's speech yesterday appears to have stabilized the situation for the moment as a formal agreement with the DUP is negotiated, explains the research team at BBH.  

Key Quotes

“Meanwhile, the Queen's Speech, where the Prime Minister lays out the government's legislative agenda, has reportedly been delayed a few days.  Brexit negotiations, which were supposed to start next week, have also been delayed.  Given that both the Tory and Labour manifesto called for leaving the EU, there may be grounds for a bipartisan approach, but it is not clear the extent of the appetite for such an approach.”  

“Separately, UK consumer prices were firmer than expected.  Headline CPI rose 0.3% for a 2.9% year-over-year pace.  It was 2.7% in April.  The preferred CPIH also rose 2.7% year-over-year.  The core rate ticked up to 2.6% from 2.4%.  The headline is the highest in four years, and the core is the highest since June 2012.  It is suspected to be near the peak.  Energy is already fading, leaving the past decline of sterling (~8% in June 2016) as the remaining culprit.”