Credit Suisse FX Strategy Research outlines the key scenarios for the UK elections on Thursday and the potential GBP direction for each of them.
1- “If the Conservatives win with a comfortable majority of 50 seats or more, there is scope for GBP to pop higher on the result and we would look to sell GBP on such a pop, given our longer-term concerns over Brexit talks and the future for the UK economy.
2– Meanwhile, a frustratingly tight win for the Conservatives, or results worse than that, would likely see GBP gap lower. But as some market participants believe this “bad outcome” actually raises the odds of a “soft Brexit”, we assume a bid would emerge that steadies GBP after its initial gap lower,” CS argues.
Source: Credit Suisse Global Fixed Income Research
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