The UK General Election Put the GBP in Focus
It’s finally election day in the UK. Can Johnson win a majority and deliver on Brexit or is there more pain to come? The UK may finally would be able to put the epic Brexit saga behind it. GBP/USD is sitting now on 9-month high and H4 RSI is in overbought zone.
Boris Johnson is ready to take Britain out of the EU with the deal negotiated just weeks ago. Whether there are any jitters ahead of the first set of results remains to be seen, but some caution is likely to set in.
On a Tory victory market euphoria could see GBP push higher across the board. For the GBP/USD, beyond the March 2019 highs of 1.3380, it’s likely to see a rally towards $1.35 levels and possibly more before we start to see any retreat. Because such outcome was already priced in, later the pound could see a "sell the fact" pullback.
Of course, a hung parliament scenario is not excluded. The prospect of Brexit being done early next year will evaporate and the pound would price in further Brexit uncertainty taking it back to 1.2820 before further potential rebound from this support.
Labour Small Majority is the least market friendly outcome given market concerns over Labour’s nationalization and fiscal policies, in addition to further Brexit uncertainty. The market is not pricing in a Labour win. But if Corbin enter on Downing Street, the GBP/USD could drop significantly towards 1.26.
What is your projections and bets?
Boris Johnson is ready to take Britain out of the EU with the deal negotiated just weeks ago. Whether there are any jitters ahead of the first set of results remains to be seen, but some caution is likely to set in.
On a Tory victory market euphoria could see GBP push higher across the board. For the GBP/USD, beyond the March 2019 highs of 1.3380, it’s likely to see a rally towards $1.35 levels and possibly more before we start to see any retreat. Because such outcome was already priced in, later the pound could see a "sell the fact" pullback.
Of course, a hung parliament scenario is not excluded. The prospect of Brexit being done early next year will evaporate and the pound would price in further Brexit uncertainty taking it back to 1.2820 before further potential rebound from this support.
Labour Small Majority is the least market friendly outcome given market concerns over Labour’s nationalization and fiscal policies, in addition to further Brexit uncertainty. The market is not pricing in a Labour win. But if Corbin enter on Downing Street, the GBP/USD could drop significantly towards 1.26.
What is your projections and bets?
Trade closed: target reached:
Sterling strengthens broadly as exit poll suggested that Conservative Party is on course for a thumping 86-seat majority after the landslide win in the elections. As we expected as result in that scenario GBP/USD jumped and hit 1.3515 earlier this morning.
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