UK Politics--Thursday Vote is Key

Some observers are talking about M&A activity and sterling. Vodafone is said to be close to selling its nearly 45% stake in mobile operators SFR to France's Vivendi for about 3.6 bln euros. Yet it is only giving sterling a bit of comfort as the broader dollar move takes its toll. The $1.5650 area corresponds with a 50% retracement of the sterling's bounce last Thurs and Friday. Below there, $1.5575, the low from Friday is the next obvious target. There is a host of UK data this week and outside of house prices, the data has been generally better than expected. Resistance is seen near $1.5720 now.

The BOE meets on Thurs and although the British Chamber of Commerce urges another round of asset purchases, the BOE is most likely not going to comply. If this is indeed the case, the more interesting event on Thursday is in the political not economic realm. On Thursday, the House of Commons is scheduled to vote on raising university tuition fees (as much as GBP9,000, according to reports). This is causing a bit of a rift in the Tory-Lib Dem coalition. The Lib Dems had signed a pre-election pledge to oppose tuition fee increases. But the basis of the coalition is that if Lib Dems can't vote with the government, they would abstain.

It is not immediately clear, but there is some talk that the Lib Dem Transport Minister could resign from the government to vote against the measure. The Lib Dem vote may be split three ways and it is difficult to know in what proportions, but one group may end up voting with the government, feeling obligated, one group may abstain, and another group may vote against it. Coalition governments typically do not have a long tenure in the UK, but on balance the Lib Dems still have to play for electoral reform, which is in their long-term strategic interest.
UK Politics--Thursday Vote is Key UK Politics--Thursday Vote is Key Reviewed by Marc Chandler on December 06, 2010 Rating: 5
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