16 Feb 2015
Political uncertainty could threaten the pound – Rabobank
FXStreet (Edinburgh) - The upcoming UK elections could pose an immediate risk for GBP, suggested Senior FX Strategist at Rabobank Jane Foley.
Key Quotes
“Political uncertainty is almost always a negative factor for a currency”.
“The May 2015 UK general election is threatening to bring more uncertainty than usual”.
“The country is faced with the prospect of a hung parliament and of a smaller party playing the role of kingmaker”.
“Dependent on the election result the country could then go to the polls again in 2017 (or perhaps earlier) to vote on whether the UK remains part of the EU”.
“In ordinary circumstances this would likely be enough uncertainty to keep the pound under significant pressure. However, this year there is risk that the impact of political uncertainty on the pound will be dampened by the fact that sterling assets still offer relatively attractive yield”.
“We expect cable to hold around current levels in the months ahead and for EUR/GBP to grind lower towards 0.73 this year”.
Key Quotes
“Political uncertainty is almost always a negative factor for a currency”.
“The May 2015 UK general election is threatening to bring more uncertainty than usual”.
“The country is faced with the prospect of a hung parliament and of a smaller party playing the role of kingmaker”.
“Dependent on the election result the country could then go to the polls again in 2017 (or perhaps earlier) to vote on whether the UK remains part of the EU”.
“In ordinary circumstances this would likely be enough uncertainty to keep the pound under significant pressure. However, this year there is risk that the impact of political uncertainty on the pound will be dampened by the fact that sterling assets still offer relatively attractive yield”.
“We expect cable to hold around current levels in the months ahead and for EUR/GBP to grind lower towards 0.73 this year”.