The major story around the financial markets today is the British pound being pressured against its counterparts as investors price in upcoming election risks into the currency.
The GBP/USD has slipped to a weekly low below 1.28 so far during trading, and traders will be keeping a close eye on whether the pair can conclude trading below 1.2755. This could encourage further selling pressure to where the Pound was valued when Theresa May unexpectedly called a snap election at around 1.25. These losses being seen in the pound can be strictly linked to the financial markets becoming anxious with a major election taking place just over one week away, and investors stacking their cards heavily in favor of Theresa May winning a one-horse race. Recent indications have suggested that the election is going to be a closer call than what was previously thought, and traders are now starting to shuffle their cards towards other potential outcomes.
All in all, the slide in the pound provides another example of the markets underpricing risks heading into a major election. I personally don’t think that the markets are prepared for a close election as it is, let alone other possibilities such as the potential for a hung parliament.
Disclaimer: The content in this article comprises personal opinions and ideas and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
Risk Warning: There is a high level of risk involved with trading leveraged products such as forex and CFDs. You should not risk more than you can afford to lose, it is possible that you may lose more than your initial investment. You should not trade unless you fully understand the true extent of your exposure to the risk of loss. When trading, you must always take into consideration your level of experience. If the risks involved seem unclear to you, please seek independent financial advice.