Analysts at Nordea Markes point out the British Pound usually suffers ahead of an election so they consider that long EUR/GBP positions could become interesting.
Key Quotes:
“We are headed to the ballot boxes in the UK within a month or so at the latest. Early general elections were always ultimately unavoidable in our view, and that was also the case during Theresa Mays reign.”
“GBP tends to suffer from an election risk premium, when we enter the final phase ahead of an election. Ahead of the the past two “Brexit-related” elections, the GBP started weakening 10-15 trading days ahead of the actual election.”
“While everything seems to be falling apart around Boris Johnson, who says that Boris cannot win a big mandate in the eventual general elections (not us)?”
“It could become interesting to enter long EUR/GBP positions again ahead of the elections.”
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