UK Prime Minister Theresa May’s Conservative Government, which now relies on Ulster’s Democratic Unionist Party to keep it in office, is currently engulfed (along with its Labour Party Opposition) by scandals involving allegations of improper sexual conduct dating back over many years. There was a palpable sign of relief in London on Monday morning that there had been no further revelations or resignations over the weekend and having held in a very tight range between 1.3063 and 1.3078 during the Asian session, GBP/USD was able to press ahead to a best level in New York of 1.3168 with GBP/AUD reaching a high of 1.7142.
The bigger picture for the UK economy, though, still seems to be one of weakness. Latest figures released Monday morning showed total car sales in the UK are down 12.9% y/y; the seventh consecutive month in which fewer cars were sold relative to the same month a year ago. For the first 10 months of 2017, a total of 2,224,603 vehicles were sold compared with 2,330,663 in the same period in 2016. Along with house prices, nothing quite shows consumer confidence as clearly as shiny new cars on the driveway. A double-digit y/y decline is a vivid illustration of the current fragile state of the UK economy.