United Kingdom – Snap General Elections 2017

United Kingdom – Snap General Elections 2017

2017 is now expected to be an even bigger year for the United Kingdom – On the 18^th April, British Prime Minister Theresa May made the shock call for a snap general election to be held on the 8^th June, 2017. This is contrary to what she has previously said on numerous occasions. In fact, on the 30^th June last year as she stood for the Conservative leadership, she claimed ‘There should be no general election until 2020. There should be a normal autumn statement held in the normal way, at the normal time, and no emergency budget’. This is an announcement that was not anticipated by the markets especially with the Brexit talks fast approaching.

» How did the markets react?

Before Theresa May’s announcement about the snap general election, the Pound was trading around the level of 1.2563 against the US Dollar but post announcement we saw the Pound strengthening against the US Dollar and moving to its highest level since October 2016. With the general elections and the start of the Brexit negations coming up in June, we can expect even more uncertainty for the Pound in the months to come.

Forex – GPBUSD

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Source: GO Markets MT4

As for the FTSE 100 index, it had the biggest one day drop since the Brexit vote back in June 2016 and had more than £45 billion wiped off after Theresa May’s announcement.
FTSE 100 index fell 2.4% (180.09 points) and ended the day at 7147.5 and it marked the biggest one day percentage drop for the FTSE 100 index since June 2016, when it fell 3.1%.

Index – FTSE100

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Source: GO Markets MT4

» What are the latest polls saying?

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Source: YouGov

» What happens next?
It has only been a few days since the general elections were announced but most parties have already started their election campaigns. We are expecting the parties to launch their manifestos in the next coming weeks and then we will have a clear idea of what each party is proposing as part of campaign.
Looking at the polls from YouGov now, it would be a big surprise if the Conservative party did not win the elections on 8^th June but the launch of the manifestos could potentially change that. It worth keeping up with the announcements in the coming weeks to see how the election campaigns will unfold for each party.
The new President of the European Parliament visited Theresa May on 20^th April and advised that the UK’s snap election will not affect the Brexit negotiation timetable of two-year exit deal negotiation followed by a three-year transition phase with negotiations expected to begin in June, just after the UK elections.

 – By Klavs Valters