7 May 2015
GBP/USD might squeeze higher if UK polls result in a Tory led government – Investec
FXStreet (Barcelona) - Jonathan Pryor, Head of FX dealing at Investec, shares the probable performance of GBP/USD into the UK election results.
Key Quotes
“Depending on which paper you pick up the vote could go any number of ways. What appears to be increasingly clear though is that it won’t be clear cut and there will be work to do for the victor in the polls to form a coalition with one of or a number of the smaller parties.”
“Judging by current sentiment it appears that the pound is keeping it’s fingers crossed for a Tory led government, whilst the prospect of a Labour minority government in partnership with the SNP is probably the most feared scenario for Sterling from the markets.”
“We’re currently bobbing along quite comfortably in the low 1.50’s in GBPUSD and the favoured result for the pound could see this rate squeeze higher with the backdrop of a weaker dollar in recent weeks. However, a messy and uncertain result leaves Sterling hugely exposed to weakness and the recent lows of 1.4595 may come under threat over the course of May.”
“Finally, further afield it appears markets in general are showing much more optimism with potential drivers behind the higher oil prices and a slightly more optimistic outlook in Europe. It’s still very early days but we are seeing evidence of this in the rates; GBPEUR hit 3 month lows overnight whilst GBPUSD remains above 1.5000 despite the election risk looming.”
Key Quotes
“Depending on which paper you pick up the vote could go any number of ways. What appears to be increasingly clear though is that it won’t be clear cut and there will be work to do for the victor in the polls to form a coalition with one of or a number of the smaller parties.”
“Judging by current sentiment it appears that the pound is keeping it’s fingers crossed for a Tory led government, whilst the prospect of a Labour minority government in partnership with the SNP is probably the most feared scenario for Sterling from the markets.”
“We’re currently bobbing along quite comfortably in the low 1.50’s in GBPUSD and the favoured result for the pound could see this rate squeeze higher with the backdrop of a weaker dollar in recent weeks. However, a messy and uncertain result leaves Sterling hugely exposed to weakness and the recent lows of 1.4595 may come under threat over the course of May.”
“Finally, further afield it appears markets in general are showing much more optimism with potential drivers behind the higher oil prices and a slightly more optimistic outlook in Europe. It’s still very early days but we are seeing evidence of this in the rates; GBPEUR hit 3 month lows overnight whilst GBPUSD remains above 1.5000 despite the election risk looming.”