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UK Election & Fate of Pound Sterling

May 11, 2015

By: ASAD RIZVI (KARACHI)   Published on May 11, 2015……………………………….
A big change in the UK general elections is clearly visible that has upset all the pre-poll forecast. Miliband like every politician did not talk differently and was extremely surprised by the election results, which is won by the Tories.

On economy, David Cameron’s policy was on track, but on the subject of austerity, which was the main focus of (Cameron and Miliband) there is nothing remarkable or worth mentioning.
Further, one must not ignore the fact that the Tories retained power because of a sheer campaign fear. Scottish vote of 56 versus 59 in favour of SNP that surged from six votes in previous election (2010) supports my contention, which is surely at the cost of dividing the UK.
Yes, I am pointing to the English resistance and Scottish nationalism, as SNP campaigned to protect Scottish interests and not in UK’s interests. This is why Labour lost 41 seats that it had won in the 2010 elections.
The crux of the matter is that David Cameron has promised Scotland autonomy, pledging same authority for Wales.
Furthermore, it is important to note that the elected London mayor, Boris Johnson, who is likely to succeed Cameron, has spoken of a federal model, which means more power for local and regional governments.
Therefore, the 2015 UK election has certainly opened gates for more aggressive future debate on Scotland’s and Wales’ autonomy and if not executed early, protectionism will often be discussed until the next election.

Copyright Business Recorder,


Fate of Pound Sterling
Though Conservatives are considered business friendly government, but a clear win for the Conservatives may not be good news for the British currency because Cameron has promised referendum on British exit from European Union (EU) before the end of 2017.
The election result may have given some temporary comfort and in near term market may take a breather and provide short-lived stability.
How can market ignore possibility of in-fighting within the Tory party. Also keep a close eye on SNP moves , as these coupe of factors could be a big spoiler, Therefore, in future, potential risk of exit from EU, which is popularly known as “Brexit” would directly hit UK’s GDP growth. In the Euro-zone region, UK is already comfortably growing above 2 pct and exit would lead to recession, which could push Pound Sterling lower.
Pound Sterling after comfortably hitting my yearly target of 1.4650 (January 02,2015), nicely bounced back.
Now for the remaining part of the calendar year (2015), Cable needs to penetrate beyond 1.5880 for 1.6350, which is less likely to happen. Prefer waiting for break of 1.5050 for re-test of new lows.


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