UK Election Update – Potential Outcomes and Impact (Daniel Johnson)

Are we looking at a Conservative victory?

At present it looks like we could be headed for a majority victory for the conservatives. The latest polls suggest the Conservatives are at 44%, with Labor at 36%. If there is a majority conservative victory the general consensus is Sterling should rally . When the snap election was announced and a torie victory was factored into the exchange we hit 1.19 on GBP/EUR. I would not expect us to hit that level again due to inflation concerns, but we could well see a buying opportunity for pound sellers.

The pound could make large gains against the US dollar if this scenario pans out as it is one of the few currencies which has not strengthened against the pound during the build up to the election. Historically, the currency in question weakens if there is political uncertainty. Which could give an indication that had the election not been taking place GBP/USD would have breached the 1.30 resistance point.

Keep in mind however, the polls have got it wrong before look at  Brexit and the US election as examples.

A hung parliament should cause further weakening of the pound. Once a government is put in place we should see the pound rebound. By how much depends on the coalition. A coalition I feel would not be a good outcome as if parties are combined with differing views Brexit negotiations will become more problematic. Keep in mind some believe negotiations could take up to ten years, we need negotiation to go forward in the most simple fashion.

A shrewd way to trade maybe to put a limit order in overnight. A limit order means you set a target rate of exchange and should that level become available 24hrs a day it will be purchased automatically. During the evening there is likely to be big swings in the market as votes come in. For example if a Labor constituency falls into conservative hands you could see a considerable spike in GBP value. A limit order will enable you to take advantage of this situation.

If  you have a currency requirement it is crucial to be in touch with an experienced broker. The timing of your trade is vital during such volatile  times, If you have an experienced broker on board he/she can keep you up to date with what is happening in the market to help you make an informed decision. Should you find our information useful and you would like me to assist with your trade I will be happy to help you personally. If you inform me of the the currency pair you are trading, volume and time scale and I will provide a free trading strategy to suit your needs. I work for one of the top brokerages in the country and as such I am in a position to better virtually every competitors rate of exchange. You would also be looking at saving anything up to 4% in comparison to high street banks. Please do get in touch by contacting me at [email protected]. Thank you for reading my blog.