James Rossiter , head of global macro strategy at TD Securities, points out that the UK’s Thursday election has been called the “most important election for a generation” as it could decide the path for Brexit over 2020 and beyond.
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“Our base case is for the Conservatives to retain power with an enhanced majority of at least 36 votes, enabling them to pass legislation by a comfortable margin – including the Brexit Withdrawal Agreement – without having to depend on support from other parties or rebellious factions within the Conservatives.”
“FX: With GBP up sharply in recent weeks, we think our base case is fully priced – or very close to it. Confirmation of a solid Tory majority may see a knee-jerk move higher in cable, but is vulnerable to “sell the fact” profit taking and a shakeout of stale positions once the elections result is known. As such, we would not chase cable higher in the immediate aftermath even if sterling may be a buy on dips further out.”
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