UK Election Strategy For those tracking UK elections we have important updates on the opinion poll front, despite manufacturing declining further Pound will only move on election polls for the coming weeks.
Here is a snapshot from the latest Westminster voting intention polls were released over the weekend:
- CON = Conservatives, LAB = Labour, LDEM = Liberal Democrats, BREX = Brexit Party
- Change from previous poll by the provider shown in () & provided by Britain Elects.
- Furthermore, there were two model estimates of seat outcomes released over the weekend, with Datapraxis pointing to a 48 seat majority for the Conservative Party, while Electoral Calculus pointed to a 64 seat majority for the Conservatives.
- Polling in the next few days/coming week will be key, and will reflect digestion of two major parties’ manifestos
For strategy on the FX board we are going to dissect GBPAUD; a Johnson majority will present a knee-jerk positive reaction for GBP; which can carry cable towards 1.35 and GBPAUD towards 1.94xx. Although this option will guarantee severe damage to the UK economy via Brexit the initial perception knee-jerk reaction will be seen as positive GBP as it will pave a path for clearer pain. This will trigger the outlook switch from neutral in Sterling to sell, eventually cable will slip towards 1.15xx once we trigger the 'buy rumour sell fact' leg in Brexit.
To the other side, a Labour majority or rainbow led coalition contains a knee-jerk downside repricing in GBP via Corbyn's unfriendly corporate policy. Capital inflows will dry faster than even the biggest bears on the street expected from Brexit. This will push GBPAUD to test the lows in the range 1.85xx.
The last leg to the stool is a Hung Parliament , this will keep the country in limbo and immediately trigger Cable to test the 1.22-1.24 lows. A reset back to the chaos we were trading all year long, a country spending years in debate with no progress is very bearish for the currency.
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