UK EU election: 32% for Brexit party, 9% for Tories – Quiet before storm in pound sterling?

The EU election in Great Britain is meaningless in terms of content for the island since the British want to leave the EU anyway. But it is important because it gives the voters the chance to officially express their opinion on the chaos theatre they have been performing in London for months in the middle of the worst Brexit bonfire.

Catastrophic slap for the Tories

And so catastrophic is the current situation. Theresa May’s conservative Tories only reach 9.1%. This is the worst result since 1832! Unbelievable, a catastrophe! With such a result it becomes clear that the party will probably turn tight on a hard Brexit course to win back the hardliner voters. Because the “Brexit Party” which Nigel Farage recently stomped out of the ground will be by far the strongest party with 31.6%!

Hope for a softer EU withdrawal or even a new referendum on Brexit could make the bloc of EU friends damn strong. The Liberals won 20.3% of the vote, the Greens 12.1% and Jeremy Corbyn’s Labour 14.1%. So together at least in Brussels they have a fictitious 46.5%.

Why do we write in the headline about a possible silence before the storm for the British pound? Well, from Friday evening until now it even rose slightly against the US dollar from 1.2710 to 1.2736. And today is Bank Holiday in Britain. So we can assume that the majority of forex traders in London will only really hit the keys again tomorrow. Nevertheless, the Pound is currently traded on the free interbank foreign exchange market outside the UK as well. So 1.2736 is a real price. Only less liquid. And therefore also less meaningful?

Hard Brexit wanted?

The strong result of the Brexit party obviously shows that Tory voters flocked to Nigel Farage. Probably only for this purpose. Namely to show the Tories that they want a hard, clear Brexit and no back and forth bickering over details. Boris Johnson as the next prime minister may become more likely. And the chaos on the island should just increase. And how the UK will get out of the EU and under which conditions will become chaotic. Even more so than it was conceivable under Theresa May.

So is it a good idea now to bet on a falling pound exchange rate before the pack is back on the screen tomorrow? And before the chaos about the Tories really breaks out in the next few days? It’ an option even though we at FMN don’t make any trade recommendations! Please decide for yourself! Support in the chart is 1.25 from December 2018. If prices continue to fall this would be the next benchmark.

Boris Johnson. Photo: EU2018BG Bulgarian Presidency CC BY 2.0

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