Predicting The General Election Effects

Possible Outcome Scenarios of Thursday's General Election Results

The week is finally upon us, the UK will go out on Thursday 8th June to vote for their new Prime Minister.

So what may happen after Thursday's results are in? if you are thinking of exchanging currency for a property purchase then the result could impact your budget going forward, feel free to call us to discuss the option open to you.

Over the last couple of weeks, we have seen the Pound lose around 3% against most major currencies due to the uncertainties that have been brought about by this election. The market was initially confident that British PM, Theresa May would win by a sizeable majority, but it seems now various opinion polls are showing that this may not be the case but who really knows?

Strong and Stable Result -

Why was the market happy for a Theresa May win, this is because it would be a continuity of agenda. Any form of uncertainty hurts the markets, and this is why the Pound has lost so much value since the Brexit vote. The PM has already begun the process of Brexit, and many people would like her to see it through, as opposed to somebody else coming in and starting again. I feel that many voters are not voting on policy, but voting for Brexit again to ensure it happens.

The common consensus is that if Theresa May wins this election with a decent majority (Anything over 100), then the Pound will strengthen, this is mainly due to the fact that with a majority, Theresa May can continue with Brexit negotiations without too much opposition. (The faster Brexit happens, the better for the markets).

Hung Parliament Result -

Looking at the thought of a Labour win in this election is causing the Pound to weaken, and according to opinion polls, Jeremy Corbyn has been eating away at Theresa May's margin and seems to be closing in. Currently, opinion polls are not predicting a Labour win by majority, but are forecasting that a "Hung Parliament" is possible if the Conservative's don't manage to get enough seats.

If this happens, many analysts are forecasting that Labour, SNP & the Lib Dems could form a coalition Government.

Why a Change brings about uncertainty -

The reason why the Pound is weakening every time Corbyn seems to take a jump in the polls is nothing personal against him. It is simply because the markets do not like uncertainty, a new Government will mean a new stance on Brexit, (A softer Brexit perhaps), and though this sounds great to many people in the long term, the short term does mean that the Pound will weaken as a result.

If you are thinking about any Currency Exchange soon -

For those of you selling the Pound, the markets will be very narrow leading up until Thursday, many traders will leave the Pound alone until we have a result, so the Pound will remain weak, which means that for those of you who are buying the Pound, there will be ample opportunities leading up to the elections.

Following the elections, it seems that the consensus is still the same, a Conservative win will mean the Pound will strengthen, and a Labour win will mean the opposite. It won't be as simple as this, of course, it will come down to the size of the majority the winner has.

Assuming a majority win for the Tories, how will it pan out -

100-120 seat Majority - Very strong win, exactly what the markets are priced for, Sterling strengthens.

Less than 100 - A successful result, Sterling would react positively.

Less than 50 - Would set fears of a "Hard Brexit" into the market, Possible weakness for the Pound.

Less than 30 - Could cause Sterling to move lower.

Less than 20 - This would be a "Red Alert" for Sterling.

17 seats - This is close to the current majority, would cause the Pound to weaken.

No Majority (Hung Parliament) - Sterling weakness until there is a resolution.

Assuming a Labour Win -

And just to play Devils advocate, there is always a chance of a very convincing Labour win, if this were to happen I believe the Pound may strengthen due to the certainty of a new leader and the Public being behind them, in the short term we may see some weakness, but in the long term I think the Pound would react positively.

Current rates:

Monday 5th June 2017 at 12:40

£1.00 GBP = 1.1482 EURO

£1.00 GBP = 1.2911 USD

£1.00 GBP = 1.7283 AUD

£1.00 GBP = 1.8114 NZD

£1.00 GBP = 1.7418 CAD

£1.00 GBP = 16.4815 ZAR

Do you want more information ?

So if you need to buy or sell sterling and would like to be kept up to date with all the latest data releases and exchange rate movements then feel free to contact myself Ben Amrany. If you are buying or selling a house in France we will make sure your monies are in the right place at the right time, we work hand in hand with you and Cle France.

For more information on the currency service I can provide please feel free to contact myself...

Ben Amrany from FC Exchange follow this link or phone and ask for myself and quote "Cle France" on 020 7989 0000.

You may contact me directly using this form (click here) with your requirement and I will explain the options that are available to you in getting the best exchange rate.