Bank of America Merrill Lynch commented on possible scenarios following a snap election in the UK.
"Are we finally approaching the completion of the first phase of Brexit? Most likely, but we are not entirely sure. House of Commons gave the green light for the December 12 election. In this scenario, we look at the possible economic consequences of certain election results." .
- Conservative Party Win Majority, Formal and Last Brexit Agreement
- A Labor minority is reached and a second Brexit referendum is called
- Parliament is hanging, without clarity, without bargaining and raising risks
- The unprecedented fourth election of the last nine years will provide clear evidence of how the FX markets will likely react before and after the election. BAML expects volatility in the British pound to rise by election day next month. The bank is not concerned with predicting direction, because of uncertainty and high volatility,
However, the investment giant will expect traders to push the currency pair above 1.30.
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