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Effects of UK Election on Pound Sterling

June 8, 2017

Asad Rizvi 

GBP @ 1.2953 = Recent strength of Pound Strength was surely backed by hope that May’s Conservative party will win elections with landslide margin. But latest opinion polls suggest it is not going to be a cakewalk for the Conservatives.

The key point in for May’s party in this election is that her party requires a minimum of 326 seats to establish itself as a majority party in parliament so that it can easily rule without any outside support.

Latest opinion polls suggest there could sudden shift in voter’s stance, as Labour’s Jeremy Corbyn has gathered momentum and are likely to catch up fast to narrow down the lead.

Interestingly Torries that enjoyed 17-seat working majority took the chance in a hope to increase its count hoping for an easy sail of her boat towards her Brexit destination.
Now there is an increased probability that her party’s plan may backfire, as any shift in voter’s stance could be the result of outcome of some of major policy shift by the ruling that may demoralize the investor’s sentiments.

Though the chance for Labour victory is almost nothing, however a surprise win or hung parliament could witness Pound Sterling crashing by 8-10 big figure.

But even if May fails to get the majority votes or if the gap widens against expectation, it could be very tough to manage business and so would Pound plunge. Hence, the magic number to watch is 300 plus or minus. Higher number means less pressure and lower if it goes, which means tougher opposition stance.

Therefore, anything around 330-335 seats or above will see Pound Sterling making mild upside towards 1.33-35 zones before exhausting and disastrous number to watch could be around 290 seats or below, which see Pound sinking towards 1.20 zones. I am expecting Pound to crash.

(Disclaimer applies in my post, which means that the perspective is my personal view. I have made every effort to ensure accuracy of information provided. However, accuracy cannot be guaranteed. This article is strictly for information and not intended for Trade or Business Transaction). 


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