The British pound is the currency that everybody is talking about at the moment with investors and traders alike taking positions mainly connected with the ongoing Brexit negotiations which has seen the British currency experience some wild swings.
Analysts from One of the world’s largest banks think they have come up with the magic figure to go long on the pound which all depends whether the UK government is forced to call a general election.
With Prime Minister Theresa May unable to get her Brexit deal through parliament she has reached out the opposition labour party to try and push a deal through but in over the last 24 hours there have been rumors that the negotiations were falling apart and many see the only way out is for the PM to call an election.
An election is bound to cause the chances of a no deal to rise significantly and just the announcement of an election will see the pound drift significantly lower which may be the time to buy.
“We don’t think that Theresa May is able to get the current deal through the U.K. parliament. It is not likely to happen and with that, it opens the door to general elections,” said Tan Teck Leng, a foreign-exchange analyst at UBS Global Wealth Management.
“Is that higher or lower uncertainty? It is a lot higher because you don’t know the parties, if they were to campaign, are they going to campaign on a harder Brexit or softer Brexit. If you get a no-deal Brexit, it is not going to be 1.24, it is going to be 1.15 or below that is the reality. Now, what can take the pound down to 1.24?” this could be“ the opportunity for you to buy pound cheaper, The simple trigger (calling elections) would be just pure heightened uncertainty,” he added.
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