Citi discusses the GBP outlook around the possible different outcome of the Dec-12 UK elections.
An outright Conservative majority would likely see PM Johnson being able to pass his Brexit deal as the base case outcome before
year-end (likely sterling bullish). PM Johnson has indicated that the UK Parliament will be summoned on December 17 if he wins a
majority and the Queen’s speech – which marks the formal start of a new government – will take place December 19. If it is a different
government, then the Queen’s speech is expected January. This means that hypothetically, a Brexit deal could pass the House of Commons
before Christmas and well before the January 31 deadline.
But even the second most likely outcome is likely GBP positive – an economically constrained Labor + Lib-Dem + SNP supply &
confidence agreement opens the door to a People’s Vote without No Deal on the ballot paper,” Citi notes.
A hung parliament on the other hand would likely be GBP bearish but looks highly unlikely if this week’s polling is on the mark,”
CITI RESEARCH/MARKET COMMENTARY
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