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What will happen to the pound after the election?

by LLB Editor
11th Dec 19 8:34 am

With sterling having largely priced in a market friendly Conservative victory on Friday there is limited room for a further rally from here, according to Brooks Macdonald.

In fact, should there be a very narrow working majority for the Conservatives or a hung parliament we could see a sell off in sterling as expectations of continued uncertainty are priced into the market. This disproportionate downside compared to the upside is one of the reasons why sterling risk-reversals, a measure of trader positioning, is pointing to investors hedging against adverse sterling moves.

Regardless of the results of Election 2019, clouds will remain over the UK outlook. Uncertainties remain around the future shape of the EU/UK trade deal, the size and timing of future government spending and the actions of the Bank of England. These are the primary factors behind our current underweight to UK Equities.

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