ING FX Strategy Research argues that the narrative that GBP will rally on a landslide Tory win at the upcoming UK General Election may be a bit simplistic especially after the recent short positioning adjustment.
“Assuming the polls are right and the Tories win, it is what happens next – and Mrs. May’s initial post-election steps – that matters more for the pound. The emphasis is on the second stage; both a cabinet reshuffle (likely within a few days of the election result) and the UK’s stance on a Brexit transition deal will give GBP markets greater directional steer,” ING adds.
“The bottom line is that GBP risks from the General Election look asymmetrically skewed to the downside – there is now more to lose than gain,” ING concludes
GBP/USD is trdaing circa 1.2940 as of writing.
Source: ING Global Markets Research
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