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Wednesday, 7 June 2017

Britain Elections and its effect on the GBP

The British pound went through a huge dive when the UK decided to exit the European Union (EU). Since then it has been trying to rally and regain some ground. Another highly volatile event now exist for the British Pound, this being the UK general elections that will take place tomorrow. Before attempting to trade this event there are a few things to consider.

London Terror Attack

This event took place over the past weekend and was a horrific attack in the UK capital. Although the event didn't affect the GBP greatly against its USD counterpart it may play a significant roll when combined with the UK general elections that is slated to happen on Thursday June 9.
The attack left 7 people killed with 48 injured and distributing an air or fear over the city of London. This attack delivered a blow to businesses and a lot of precautions will be taken in order to prevent such an attack from reoccurring. It is reported that the attackers were killed  shortly after committing the heinous act.
This event may also cause voters to lose confidence in the present government's ability to keep them secure and could drive the voters to vote otherwise. Although political campaigns were cancelled Monday due to the attack, the Labour party has gained significantly on the Conservatives who are still leading however.

Current Prime Minister

The current prime minister of the UK is 60 yrs old Theresa Mary May a British politician who also serves as Leader of the Conservative Party since July 2016, the second female to hold both positions.
Within Theresa May's tenure it can be recorded the UK exited the European Union and as such removed themselves from whatever benefit that union provided. It also prevents residence of the other members of the EU from getting any direct benefits from the United Kingdom.

Since May announced the Election on April 18 her and her Party's lead has been declining. Although they are still in the lead it may be of great concern to the party headquarters that their lead has moved from 17.8 points to just under 10 points. This could lead to a change in power in the government which could affect investor confidence, business growth, economic strategies and the GBP.

Considering that a switch in governance may happen here are a few things to evaluate before you trade GBP pairs:
1. How volatile will the GBP behave.
2. Have i set my stop losses and take profit on all GBP pairs.
3. It may be better to stay away from GBP pairs till the election noise settles.
4. How will my ope trades be affected.

Even if the Conservatives remain in power the GBP may still be volatile on the day and the day following the election.

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