Forex Traders Watching U.K. Election
In the months before an election that must be held before June 3 in the U.K., currency traders will be keeping an eye out for political shifts in Britain. According to the Wall Street Journal, "Unless the winning party can deliver a credible plan to trim borrowing, the U.K. could face a humiliating downgrade from credit ratings agencies...hitting sterling hard."
If neither the incumbent Labour Party nor the Conservatives Party are able to secure a majority of seats, resulting in a hung parliament, "implemenation of a credible deficit reduction program could be delayed," causing a major sell off in the British pound. If the Conservative Party maintains its lead in opinion polls the pound will likely hold firm because the Conservatives have said they will make deficit cuts a priority. If, however, the Conservatives lead in the polls shrinks, it could result in a "probable sterling crisis."
