David A. Meier (Julius Baer) | Prime Minister Johnson’s Conservative Party grabbed a commanding victory. An orderly Brexit based on the withdrawal agreement is highly likely on 31 January. Given plenty of looming uncertainties during the transition period, such as the final UK-EU trade relationship and Scottish appetite for independence, we stick to a Neutral short-term British pound outlook.
UK General Election
D. A. Meier (Julius Baer) | Based on a lead in polls, a Conservative majority is highly likely. Labour’s socialist manifesto seems too radical to spur a full catch-up. A hung parliament remains a considerable risk. After a Conservative victory, a moderate fiscal boost could limit the Brexit fallout. After a Labour win, its political agenda could erode its huge fiscal spending plans, despite a softer Brexit.
As Peter Kinsella, UBP’s global FX strategist highlights, the US dollar bull market has likely run its course as we enter 2020. Indeed, since 1995, long-cycle inflections in the US dollar exchange range have coincided with long-cycle under/outperformance of US equities relative to non- US equities.
Chris Stafford via The Conversation | Despite repeatedly insisting he didn’t want a general election, Boris Johnson, the UK prime minister, has now tried and failed to get parliament to support one. It now looks like he’ll try again or seek a vote by some other route. Having lost his majority and control of parliament, a general election seems almost inevitable now. The big question, though, is when it will happen.
When Ms. May called for General UK Elections, she was fully confident of a landslide victory. Jeremy Corbyn seemed no match for her. But successive blunders and a rather clumsy campaign have led to an unforeseen revival on the part of the Labour party. But the best result for the UK and Europe would be either a landslide victory for Ms. May or an unexpected Labour win.
UK Prime Minister Theresa May’s call for a general election on June 8 is a very important coup for the Brexit process. It assumes these elections will allow her to bring together a lot of favourable intent, when the opposition is trying to find itself. With her majority reinforced, she will be in a stronger position to negotiate the Brexit deal.
The 2015 UK General Election could see the end of the Conservative-Labour dominance in Westminster.