U.K Snap Election Pound Positive, more to follow

The Pound is on the rise in volatile trading this Tuesday morning after U.K’s PM Theresa May called a snap general election for June 8 ahead of the U.S open.

Sterling is currently trading up +1.5% at £1.2755 outright, after falling as much as -0.3% (£1.2527) ahead of the 06:15 EST announcement.

Up until now, political uncertainty has weighed heavily on the pound since the Brexit referendum, losing as much as -15% against a basket of currencies.

In 2017, sterling has managed to stabilize for the best part as the U.K economy defies the worst of post-Brexit predictions.

For investors, the currency in now entering into the zone of last December high territory (£1.2775-1.2800), which many consider the defying “line in the sand.”

There are a number of reasons why GBP bulls believe that a ‘big’ double bottom or even triple may have been recorded.

Mandate for May

Winning a snap general election will give PM Theresa May both a wider and stronger mandate to shape Britain’s E.U divorce.

The PM was an originally in the “remain” camp and if need be, having more control would allow her to pursue a ‘softer’ Brexit agenda, something closer to her beliefs.

Boris Johnson

On entering Downing Street, the PM had to be rather agile. She manoeuvred out a number of ‘hard’ Brexit supporters (Osborne, Grove), but appointed Boris to appease her critics of a possible ‘soft’ Brexit. With a clear mandate she would have the opportunity to dispense of his services.

UKIP No Show

It was Nigel Farage and company who pressured former PM Cameron to hold the E.U Referendum. With the UKIP party currently in such disarray, a snap election offers little threat for a ‘hard’ Brexit.

Labor to be Defeated

Current polls shows the Conservatives having a +19 point lead over Labour and PM May obviously deems this the best time to defeat Jeremy Corbyn. Net result should be market-friendly regardless of Brexit.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell