 Good morning and welcome to CMC Markets on Friday the 24th of May and this quick preview of the week beginning the 28th of May and the sands of time appear to have run out for Prime Minister Theresa May as she announced her resignation this morning just after 10am UK time. She will be gone by the 7th of June in the wake of or in the wake of the departure of President Trump back to the United States and in the wake of the 75th anniversary of D-Day commemorations and it's been a long time coming for the Prime Minister it's become apparent quite some time ago that she would probably be very fortunate to get her withdrawal agreement through the House of Commons and the last straw came earlier this week when she tried to tag on the end of it a confirmatory referendum which pretty much caused the Conservative Party to erupt in unified fury against her but in outlining the terms of her departure it doesn't change the overall mathematics of the problems currently facing UK MPs anyone hoping for a quick resolution is likely to be disappointed and with the European elections this week and the Conservative Party and the Labour Party likely to be very big losers in those European elections it suggests that the divisions within the country are likely to remain as wide as ever and could well complicate matters in the event that the UK applies for an extension ahead of the October deadline I think in terms of where we go to next it's going to be very uncertain in terms of who becomes the next Prime Minister first and foremost Boris Johnson has to make it on the ticket to actually get put forward to Conservative Party members and given how he is perceived by some members of the Conservative Party that is by no means guaranteed but certainly over the course of the next two to three weeks we can certainly see the runners and riders set to make their pitches to not only their fellow MPs but also to the party faithful as well so the Pound has as at the time of speaking seen a little bit of a rebound after 14 successive days of declines and while some would argue that the removal of Prime Minister may to be replaced by potentially a hardcore Brexiteer makes a no-deal Brexit much more likely that's not necessarily the case yes that is the default position in law we're still five months away from that but I think it's more than likely that we could well see the Labour Party push for another general election but what I think much will depend on how the Lib Dems do and the Brexit Party does in the European elections when the results come in on Sunday night a big win for the Brexit Party could well cause the EU to conclude the UK is a lost cause and prompt some like France to push to rip the Band-Aid off and draw a line under the whole affair on the other hand if the Lib Dems do particularly well then there could be those within the EU who could argue that maybe it's worth giving the UK another chance in the event that we do ask for another extension but we are well away from potentially putting ourselves in that situation we first and foremost have to find out what's going to happen with respect to the next Conservative Party leader and the next Prime Minister and that is going to take at least a couple of months so at the moment the time that Donald Trump Donald Trump Donald Tusk alluded to a leader of the EU council about not wasting time well it looks like we're going to continue to waste time for at least another two months what does that mean for cable well we can see from this chart here that we are approaching the lower end of the recent range so there's a big supporter around about the 125 area at the moment we've we've declined for 14 days in a row we're coming up to a long weekend we potentially could be finding a little bit of a short-term base around about 126 I think much will depend on the weakness or otherwise of the US dollar and certainly over the course of the next week or so there's not really that much in the way of economic data or political risk to really drive the pound one way or the other if we also look at euro sterling what we have seen is a significant break above the 200 day moving average and if we look at this chart here we can see that now we're above it it's likely to act as fairly decent support on any pullback so support's likely to come in around about 87 1890 with a break back below that potentially signalling a move back to the 87 level but certainly in the context of this 14 day up move we are potentially due a little bit of a pause but the bias does appear to have shifted slightly towards the upside as we look towards the next few days so what's on the calendar in next for next week well obviously keep an eye out for the results of the European elections will we get a more Eurosceptic European Parliament or will the established order do better than most people expect in terms of data that's due out we have got a bank of Canada rate decision so let's have a look at dollar CAD in that context and we can see that over the course of the last few weeks dollar CAD the US dollar has been in a nice little uptrend against the Canadian dollar the Canadian dollar has weakened over the course of the past few few months but has pretty much gone sideways over the last three or four weeks but one thing has been notable and and I think that was born out by some of the recent data that we've seen out of the Canadian economy there had been concerns about the health of that economy weak GDP weak consumer spending numbers had seen the bank of Canada pivot to a much more dovish position in recent months the removal of the reference that rates might need to rise further over time earlier this year sore expectations rise of the next moving rates might well be lower and possibly come later this year now these expectations have subsided a little bit in the wake of some very strong payrolls numbers from ADP as well as public payrolls numbers we've also seen a big pickup in retail spending which is bright into the mood so maybe we could be in line for a little bit of Canadian dollar strength over the course of the next week or so we're not expecting any changes from the bank of Canada no changes in policy I think I'll pay particular attention to any changing guidance in light of some of the recent improvement in the economic data which could exert upward pressure on the Canadian dollar the offset to that could be if we see a decline in oil prices which we have seen over the past couple of days which could well undermine the Canadian dollar other data to keep an eye out for in the coming few days is Chinese manufacturing a non-manufacturing PMIs for May the recent data flash PMIs out of Germany in the US have softened a little and if they've softened a little in the US and Germany then the likelihood is they're probably going to continue to remain soft in China as well particularly now that trade trade talk escalations have been ramped up and that's why we've seen the big declines that we've seen in equity markets over the course of the past few days if we look at the FTSE 100 we can see that born out here on the weekly chart let's just draw that down into a daily chart at the moment we are holding up fairly well just above 7200 that's likely to be a very key support level but below that we've also got a nice little area of support around about 71 20 71 30 we do feel though that I think I do feel that we are in a little bit of a downtrend at the moment particularly if we're unable to take out these these highs here which come in around about 73 80 I think we can get a better idea of what indices look like if we look at the German DAX at the moment we're just about holding above that 50 day moving average and also that trend line support from the lows that we saw the end of December so I think watch the DAX for any future direction when it comes to the outlook for European markets if we break below the 50 day and we break below this trend line support then we could see a little bit of a rush down towards the 200 day moving average also keep an eye on this 14th of May low here which currently comes in around about 11,800 so we've got a whole host of support areas coming in just around about just below the 12,000 area but if we break below 11,800 then we could we'll see further heavy declines going forward. Other things to keep an eye out for this week it's fairly light in terms of the earnings picture we do have US first quarter GDP on the 30th of May this will be a revision to the 3.2 percent expansion number that we saw a month ago so I don't expect too much of a revision there that is really not likely to move the dial that much we have a whole host of earnings and announcements out from Abercrombie and Fitch Dick's Sporting Goods Dell Technologies the gap so in terms of US retail it's likely to be a big week for US retail particularly looking at the online sales numbers so I say that's it for this week thank you very much for listening it's Michael Euston talking to you from CMC Markets