UK Elections: Cable Crashes As Conservatives Lose Ground

Another Political Surprise

Markets were once again caught out by a key political event as the UK elections have resulted in a hung parliament with none of the main parties gaining an outright majority. The official exit poll released shortly after 10 pm local time yesterday suggested the outcome, leading to heavy selling of GBP, and was later proven correct as the final votes came in.
Labour Gain Ground

649 of the 650 seats have now been declared with the Conservatives taking 318% (48.9%) and Labour taking 261 seats (40.2%). Behind these two main parties, the other key seat-takers were the SNP (5.4%), the Liberal Democrats(1.8%) and the DUP (1.5%). Interestingly UKIP received no seats and voters retreated to their “home” parties, which appear to have been most Labour. This suggests that the support for UKIP in 2015 wasn’t a move to the right as such but more about a concern for immigration and with leaving the EU.
Conservatives Could Form Coalition Majority

The Conservatives represent the largest party though with no clear majority. The result has been declared a huge mistake for PM May who made the decision to call an early election, believing that her party would win in a landslide fashion. The only hope for the Conservatives now is that they could possibly form a slim coalition majority alongside the Northern Irish Democratic Ulster Unionists Party. The DUP have pledged to support the Conservatives and have stated to oppose any Labour government involvement while Jeremy Corbyn leads the party.

The result has greatly intensified uncertainty ahead of the Brexit negotiations and raised the chances of the UK leaving the EU without securing a deal. Markets will wait to see whether May will be leading the Uk in the negotiations or whether a new leader will be elected, which would further delay and disrupt negotiations.

Contrast to public perception, the chances of a “soft” Brexit are not necessarily raised in this new scenario. Labour did indeed gain the highest number of seats behind the Conservatives, however, Labour were not campaigning for a “soft” Brexit, the only parties doing so were the Liberal Democrats and the SNP.


Read full article: https://www.orbex.com/blog/2017/06/uk-elections-cable-crashes-conservatives-lose-ground/

Orbex Review