Amelia Spencer
Affiliate Relationship Manager
Could the UK be heading for another General Election?
Theresa May downplays rumours of another general election following the budget delivery yesterday.
Request a quoteThe pound fell sharply against the majority of major currencies during trading yesterday, falling to 5 week lows against the euro and a 2 and a half month low against the US dollar. This has provided our clients buying pounds with a great opportunity to take advantage of, and put into monetary terms a £200,000 purchase has become over €5,000 cheaper, or $11,000 cheaper, if timed now compared to just 3 weeks ago.
| Currency Pair | % Change in 1 month | Difference on £200,000 | |
|---|---|---|---|
 GBP |  EUR | 2.35% | €5,270 |
| GBP |  USD | 4.35% | $11,050 |
| GBP |  AUD | 4.7% | $16,830 |
Chancellor of the Exchequer, Philip Hammond delivered the Budget on Monday which has shaken investors, as speculation mounts over the increasing possibility of a UK General Election. The Budget provided positivity for many as tax cuts and increased spending, including increasing the minimum wage, was announced. However this left many questioning whether this was an attempt to soften the public’s stance on the Conservative Party ahead of a potential General Election.
Although Prime Minister Theresa May spoke yesterday stating ‘we are not preparing for another General Election. That would not be in the national interest’, this did little to ease investor confidence. In early 2017 a similar situation occurred where suggestions of a snap election were consistently quashed by the Downing Street, yet in April an election was called.
If an election is announced I would expect this to weaken the value of sterling dramatically, and we could see GBP/EUR rates back below 1.10. There have been few updates on a Brexit deal to help the pound to make any considerable gains, and unless we see any progress with Brexit talks I would expect sterling exchange rates to remain low, therefore clients looking to sell pounds may wish to move sooner rather than later.
Thursday’s Interest Rate decision and Quarterly Inflation Report
The next potential economic market mover will be on Thursday when the Bank of England announce their latest Interest Rate decision. Although no change to the Interest Rate is expected, the press conference following this announcement has the capacity to create swings for sterling exchange rates. The Bank of England Quarterly Inflation Report will also be keenly watched by investors.
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