UK Election Could Weaken Stirling For Forex Traders
Traditionally elections in the UK have had an impact on the value and strength of the GBP. However, since the Labour Party’s victory in 1997 they have become a market-friendly party which gave the Bank of England independent control over interest rates. As there must be an election by June the 3rd there is a period of uncertainty coming for traders of the GBP. The impending UK Election Could Weaken Stirling For Forex Traders, with the possibility of a deficit as large as 10%.
For 13 years forex traders at trading firms such as HY Markets have largely ignored the political shifts due to the Bank of England having control of interest rates but in the run up to this year’s general election the stakes are once again high for foreign exchange traders and investors due to a number of factors.
If there is no winner in the general election there will be a hung parliament, meaning that implementation of a deficit-reduction program could be held up by inter-party bureaucracy. If the Conservative Party holds on to its opinion poll majority lead there may be less threat to the GBP due to a pledge by them to cut the deficit more quickly and by more than the Labour Party plus they have said they will hold an emergency budget within 50 days of gaining power, if they do so. However, the Labour government has argued that massively cutting spending or raising taxes too quickly this year would actually slow down the recovery.
A number of high-profile investors have already questioned the outlook of UK Government bonds which could further harm the strength of the pound. This does however mean that there will be some lucrative positions to be had currency trading against the pound for both short and long-term investors. To take advantage of the possible faltering GBP visit www.hymarkets.com where you will find no-commission trading plus some of the most competitive spreads offered by any global trading firm.
