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- GBP: Election's scenarios & what's next for GBP? - BofAML
GBP: Election's scenarios & what's next for GBP? - BofAML
Bank of America Merrill Lynch Global Research discusses GBP outlook ahead of next month's UK elections.
"Are we finally heading for some closure on phase 1 of Brexit? Possibly but not certainly. The House of Common's last night authorised a 12 December UK general election. Assuming the legislation passes through the House of Lords today then we examine the economic impact of three scenarios for that election result:
1. Conservative Party majority and Brexit deal agreed.
2. Labour minority government and Brexit referendum.
3. Hung parliament, lack of clarity, no deal risks potentially return,
An unprecedented fourth general election in nine years provides a large body of evidence on how FX markets are likely to react pre and post the election. One unambiguous conclusion, and our preferred way to express a view on GBP is to expect higher volatility over the coming month in the run up to election day. We think GBPUSD could struggle to sustain a break above 1.30 in the run up to the election," BofAML adds.
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