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Election won't save pound
Published on 25.04.2017 20:41

The British pound is slightly higher in today’s trading against its US counterpart after positive local data increased appetite for the currency.

At 3.53pm (GMT) the pound was trading at $1.2817 up from $1.2795 in yesterday’s trading.

Data out earlier today showed Britain's public sector borrowing fell to the lowest level since the financial turmoil of 2008.

This follows on from last week’s announcement by British Prime Minister Theresa May to call early elections to break a political deadlock which many predict will make the Brexit process much smoother.

Some analysts believe that an early election won’t solve all the UK’s problems surrounding Brexit and we already have a very similar situation to compare with,

"Investors have also been making a more sober assessment of the situation as they know full well that in reality things might turn out differently post-election, as US investors are starting to find out with regards to Donald Trump," said Fawad Razaqzada, market analyst at Forex.com.

"Clearly, Brexit-related uncertainty will remain in place for a while yet. Still, in the short-term, the fact that the pound/dollar rate has managed to hold its own relatively well so far in the month cannot be ignored." He added.

The French election result over the weekend is also seen as bearish for the pound as the leading candidate to win the 2nd round of elections in May is no big Fan of Britain leaving the EU and could make the break up difficult,

 “The Pound’s euphoric rally on last week's snap election news could be at further risk if the market loses confidence in the election's ability to make for easier negotiations with the EU. The probability of Macron as the next President in France is also not doing any favors for the Pound, with the candidate a well-known critic of the UK leaving the EU,” said analysts at LMAX Exchange.


Andrew Masters

Analyst

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