The political ramifications of the hung parliament result throws up so many intriguing issues for the UK. Was this an election of the population just giving Theresa May a bloody nose or is it down to a significant surge in the popularity of socialist politics? It is difficult to ascertain that quite so soon (probably a combination of the two), however let’s just take a brief look at other questions that are thrown up. Here are a few thoughts on the result of the UK General Election.
And the impact on Sterling?
GBP/USD has stabilised following the initial sharp losses of with a low at $1.2632 now unwinding. The potential enormous downside is yet to materialise, however there is plenty of time for the uncertainty of a hung parliament to weaken sterling. The old key floor around $1.2775 will be seen as an area of overhead supply now and could begin to limit this intraday rebound. Cable was around $1.2600 when Theresa May called the election and a retreat back towards here could easily be seen. It is also interesting to see that EUR/GBP saw the spike rally fail around the resistance at £0.8850.
However the impact on Brexit will be a key factor and the hung parliament could now mean that Brexit is likely to be softer. In these least, it will make the negotiations more public, with Parliamentary scrutiny more likely. Could this mean that sterling is supported? Much uncertainty means increased sterling volatility in the coming months though.
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