3 Scenarios For UK Elections & Directions For GBP – NAB

The British pound recovered and topped 1.29 after some opinion polls showed a higher chance for an absolute majority for the Conservatives. What is the trade?

Here is their view, courtesy of eFXnews:

NAB FX Strategy Research outlines 3 main scenarios for the UK elections on Thursday and the potential GBP direction for each of them.

1- “A Conservative victory with an increased majority would now see at least a modest relief rally for GBP.”

2- “If the Conservatives secure victory but with no material improvement in their majority, there will be GBP-negative risks come this Friday.”

3- “A hung parliament with no party having an absolute majority cannot be ruled out with any degree of confidence. Were it to eventuate, knee-jerk GBP reaction would almost certainly be negative.”

GBP/USD is trading circa 1.2905 as of writing.

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