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The FxPro Analyst Team

Forex: All Eyes on the Upcoming General Election

The market-focused UK general election date is tomorrow, Thursday, June 8th.

The left-wing Labour party’s manifesto includes cancellations of university tuition, free school meals, increasing government spending on social benefits, nationalising and capping fares of train companies, water utilities and energy utilities.

In general, the Conservatives lead Labour across all ages, apart from the 18 to 34-year-old groups. As Labour focuses are on the welfare of the middle and lower classes which are widely welcomed by most citizens and young people.

Compared to Theresa May’s Brexit negotiation stance of “no deal is better than a bad deal”, the Labour Party will strive to keep the UK a major driver in the single market and the custom union. The latter is beneficial to the UK trade; however, it will likely result in the UK paying a hefty bill to leave the EU.

The Labour Party plans to fund their plans by increasing government borrowing, corporate tax and income tax for those earning more than £80,000 a year. If the Labour Party wins the election, it will benefit most citizens. Nevertheless, we will likely see a surge in government deficit. In addition, some corporations and high earners will likely move abroad to avoid higher taxes.

The weather this week has been changing. If the weather on the election day (Thursday, June 8th) is poor, then it will likely reduce the turnout ratio of voters, especially for young age group, which will likely affect Labour’s young vote.

GBP/USD has been oscillating in a range between 1.2850 – 1.2950, and EUR/GBP has been oscillating in a range between 0.8700 – 0.8760 over the past two days. Markets appear to hold ahead of the election unless there are further polls to be released.

Former FBI Director James B. Comey will testify under oath before the Senate Intelligence Committee on Thursday June 8th. He is expected to be questioned about whether Russia interfered in the US presidential election. Trump fired Comey in May as he was probing into the Former National Security Adviser, Michael Flynn. Trump fired Flynn in February after it was revealed that Flynn had conversations with Russian Ambassador Sergey Kislyak in December about lifting US sanctions.

On Tuesday, the dollar index hit a new post US presidential election low of 96.45. It was reported that Comey will likely reveal some details about his interaction with Trump related to the Russian leak scandal. If there the findings are adverse to Trump it will likely result in a falling USD. USD prospects appear to be under pressure during the investigation process.

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