Tim Riddell, Research Analyst at Westpac, notes that in the UK, recent polls have shown a lift in support for PM May, but the main parties remain painfully close and so too close to call in terms of an outcome.
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“This closeness could actually play into PM May’s hands as she attempts to pull the factions of her own party together to avoid forcing a full parliamentary no-confidence vote and election which they might lose. However, the situation remains extremely fluid and the risk of a Tory Party leadership challenge is still high. If that were to occur, there could be a push towards a no-deal Brexit.”
“While such uncertainty is so high, there is increasing risk of business investment and consumer activity being postponed.”
“As potential outcomes wax and wane, GBP will be equally uncertain. A shift now towards May’s deal will be positive for GBP. More uncertainty or a swing towards a no-deal Brexit will weigh heavily on GBP.”
“Such binary risks mean that it is increasingly difficult to have confidence in directional bias for GBP.”
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