7 May 2015
Credit Agricole: Trading GBP into the UK political uncertainty – eFXnews
FXStreet (Barcelona) - The Research Team at Credit Agricole, share the probable reaction in GBP from a Conservatives or a Labour win, as noted by eFXnews.
Key Quotes
“GBP-crosses remain stuck in ranges suggesting there is no strong market view on the pound ahead of the elections. With polls still very close to call investors will likely wait for the results to be released before putting on a directional trade.”
“The FX markets should welcome a Conservatives win especially if their current coalition partners – the Lib Dems – win enough seats to preserve the status quo. At the same time, GBP could weaken in response to a Labour win especially if they have to rely on the SNP to form a government.”
“We suspect that such an outcome should fuel fears about another Scottish independence referendum and weigh on GBP.”
“Investors should also prepare for a potentially protracted coalition building process. We think this could be achievable only if the incumbent Conservatives/Lib Dems coalition is voted back into office. Other outcomes where Labour emerges as the biggest party and/ or Lib Dems see the number of their MPs vastly reduced for example should fuel post-election uncertainty and weigh on GBP.”
“With the UK economy still doing rather well there will be no real pressure on the parties to form a government quickly. Indeed, while the formal opening of the parliament is on May 18, the Queen’s speech and, in effect, the real deadline for forming a government is scheduled for May 27.”
“The 2w and 3w GBPUSD ATM implied vol is already trading above the highs printed in the wake the Scottish referendum and this seems to clash with GBP’s apparent resilience of late.”
This content has been provided under specific arrangement with eFXnews.
Key Quotes
“GBP-crosses remain stuck in ranges suggesting there is no strong market view on the pound ahead of the elections. With polls still very close to call investors will likely wait for the results to be released before putting on a directional trade.”
“The FX markets should welcome a Conservatives win especially if their current coalition partners – the Lib Dems – win enough seats to preserve the status quo. At the same time, GBP could weaken in response to a Labour win especially if they have to rely on the SNP to form a government.”
“We suspect that such an outcome should fuel fears about another Scottish independence referendum and weigh on GBP.”
“Investors should also prepare for a potentially protracted coalition building process. We think this could be achievable only if the incumbent Conservatives/Lib Dems coalition is voted back into office. Other outcomes where Labour emerges as the biggest party and/ or Lib Dems see the number of their MPs vastly reduced for example should fuel post-election uncertainty and weigh on GBP.”
“With the UK economy still doing rather well there will be no real pressure on the parties to form a government quickly. Indeed, while the formal opening of the parliament is on May 18, the Queen’s speech and, in effect, the real deadline for forming a government is scheduled for May 27.”
“The 2w and 3w GBPUSD ATM implied vol is already trading above the highs printed in the wake the Scottish referendum and this seems to clash with GBP’s apparent resilience of late.”
This content has been provided under specific arrangement with eFXnews.