Sterling retained its strength against the majors on Friday as markets reacted to the fact that not only had David Cameron’s Conservative party secured a much larger proportion of the vote than expected, but they had actually gained enough seats to form an outright majority government. The news boosted the Pound because it removed the threat of economic uncertainty – which was expected had there been another hung parliament.

UK stocks – particularly estate agents, energy companies, bookmakers and nuclear submarine contractors – also jumped on Friday, as plans to regulate those sectors were put on hold for at least another five years.

British data actually disappointed; the trade deficit printed at -£10.1 billion compared to forecasts of -£9.8 billion. But it was not enough to dampen demand for Sterling.

Traders are unlikely to react with any great interest to the Bank of England’s interest rate announcement later today but expect more volatility on Wednesday when the BoE releases its latest quarterly inflation report.

Euro

The Pound to Euro exchange rate remained at a relatively decent level on Friday as markets stopped worrying about the general election but continued to exhibit jitters regarding Greece’s future within the currency bloc.

The Eurozone’s most written about nation remains the key concern for investors, as the Greek government struggles to pull together the funds to meet debt repayments to its creditors. Indeed, a €770 million payment to the IMF due on Tuesday is the next in a long line of deadlines that look likely to bankrupt the Hellenic nation. Prime Minister Alexis Tsipras has expressed confidence that Athens will find the funds but his sentiments appear to be at odds with those Greece owes money too; the IMF, the ECB and the EC maintain that much more work needs to be done to streamline the Greek economy.

The single currency looks likely to remain constrained until a breakthrough is made in debt negotiations.

US Dollar

Doubts remained over the prospect of a Federal Reserve rate hike on Friday when labour market data showed that 223,000 jobs were created in April, which was slightly below the median market forecast of 228,000. Markets were cheered by the increase from March’s dismal 85,000 figure but with wages stuttering at 2.2% there is a general consensus among participants that rates will not be raised in June of this year. September looks a much more likely date for the lift-off in interest rates, but even that depends on economic data rebounding from the slowdown at the start of the year – annualised US GDP slowed to just 0.2% in the first quarter and poor trade data suggests that the figure could be negatively revised in the near future.

However, there was a bright spark in the jobs report in the form of the unemployment rate, which dropped to a new seven-year low of 5.4%.

Canadian Dollar

The Canadian Dollar avoided any further gains following the UK general election results on Friday for although the domestic economy lost a larger-than-anticipated number of jobs, the headline jobless rate remained static. Compared to forecasts of a -5,000 shortfall in the jobs market, data showed that the Canadian economy actually shed -19,700 jobs in April. However, the unemployment rate remained at 6.8% and traders were pleased to hear that the large majority of the job losses were suffered by those in part-time, rather than full-time positions.

Australian Dollar

The Pound to Australian Dollar exchange rate held strong on Friday as traders reacted to a dovish set of comments from the Reserve Bank of Australia. The RBA downgraded both its growth and inflation forecasts but stopped short of explicitly commenting on the prospect of further rate cuts. However, markets speculated that the downward revisions could mean that the bank still has an easing bias and this led to a depreciation in the ‘Aussie’.