GBP forecasts
Are they counting on a same scenario as it happened on Scottish independence vote? SNP is set to win in Scotland this time with wast majority - I would not count that it will cause "long positions" triggering
Are they counting on a same scenario as it happened on Scottish independence vote? SNP is set to win in Scotland this time with wast majority - I would not count that it will cause "long positions" triggering
They are counting on same things - same election organizers and supervises
Sterling to Stumble Into Election: BNP Paribas
The election factor should be a major driver for the UK currency in the weeks ahead, say analysts from BNP Paribas, overshadowing a data flow that is expected to bring some positive results.
Sterling was trading flat at $1.4955 against its US counterpart, remaining close to its intraday low hit earlier.
Analysts say the risk connected with the May 7 election's outcome should be a dominant factor in the currency's performance, even though a set of positive economic data are expected to be released over the next few days.
On Thursday, solid gains in retail sales are expected in Great Britain.
As for the May 7 election, recent surveys are pointing to a hung parliament. The Observer poll, carried out by Opinium, found that Labour's support had dropped two points to 32%, while the Conservatives remained on 36%.
On the other hand, a YouGov survey put Labor Party leader Ed Miliband three points ahead with 36% versus the 33% currently favoring the Conservatives.
However, both polls put the two major parties well short of the 326 seats needed for an overall majority, thus bringing into play parties such as the Scottish Nationlists (SNP), the Liberal Democrats and even the UK Independence Party (UKIP), as a coalition will likely be required.
"Political risk is likely to dominate in the UK, with only three weeks to go to the 7 May general election and the conservative and labour parties neck-to-neck according to recent polls.The GBP focus is likely to remain on the close race ahead of the election", BNP Paribas said in their most recent research note.
"Last week’s rebound could well a reversal in recent sterling weakness, with a bullish weekly reversal candle. While we weren’t able to sustain a move through the 1.5000 level last week pulling back from the 50 day MA, the fact we posted 5 successive positive days for the pound suggests, we could well retest the 1.5168 high seen in mid-March", said Michael Hewson from CMC Markets in a note to investors on Monday.
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Sterling’s Election Stumble: How To Play It? – BNPP
The upcoming parliamentary elections in the UK on May 7th have already sent shivers and the pound could not sustain the moves against the euro and the dollar, despite a recent recovery.
What’s next for sterling? Here is the view from BNP Paribas:
Here is their view :
The relationship between the UK election outcome and sterling is not linear or straightforward, particularly given that the policies associated with each potential coalition could yield various and conflicting undercurrents for sterling, notes BNP Paribas.
“In the weeks ahead, the competition between parties could lead simply to an increase in GBP volatility alongside short sterling positioning, as has been the case in past political events. The risks are high for a directional move, given the level of uncertainty around the composition of the election outcome,” BNPP projects.
“Our positioning indicators suggest some scope for further downside. We would look for further weakness and, beyond that, opportunities to enter into long positions,” BNPP advises.
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