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UK Election Hung Parliament: Markets react

The UK’s general election has resulted in a hung parliament. The count at 8am on 9th June had the Conservatives on 315 seats and Labour on 26; 326 seats are needed for a party to form a majority government. The result represents a loss of 12 seats for Theresa May’s government and a gain of 29 seats for Jeremy Corbyn’s opposition.

The pound has dropped significantly following the result of a hung parliament-

Sterling has dropped following news of a hung parliament

Source: The Independent

The uncertainty over how a new government will be formed saw the pound drop to below $1.27 from $1.29 and against the euro to 1.13. This, combined with the political uncertainty, looks set to push gold up. However, India’s Economic Times reported little change overnight as the yellow metal ticked up 0.1% to $1,279.13 per ounce at 0046 GMT, with U.S. gold futures for August delivery rising 0.2%to $1,281.5.

Markets are yet to fully price the election result in with many predicting a surge of the FTSE as the pound tanks. “A hung parliament is the worst outcome from a markets perspective as it creates another layer of uncertainty ahead of the Brexit negotiations and chips away at what is already a short timeline to secure a deal for Britain,” Craig Erlam Oanda, told the Daily Telegraph. ING’s Viraj Patel, told the paper, that the failure of the Conservatives to reach a majority would be “maximum chaos”.

Carolyn Fairbairn, CBI Director-General, made clear the case for UK business, saying it must be a priority for any government ahead of Brexit negotiations:

“This is a serious moment for the UK economy. The priority must be for politicians to get their house in order and form a functioning government, reassure the markets and protect our resilient economy.

“For the next Government, the need and opportunity to deliver an open, competitive and fair post-Brexit economy that works for everyone across all our nations and regions has never been more important.

“This can only be achieved if the next government doesn’t put the brakes on business, remains open to the world and sets out a pro-enterprise vision.

“Firms will support the UK develop our inclusive, innovative and open economy. More than ever, the new Government must work together with business to make the most of the opportunities ahead. Firms can provide the evidence, ideas and solutions from the shop, office and factory floor to secure our future prosperity.”

Link to this article: : http://www.goldmadesimplenews.com/gold/uk-election-hung-parliament-markets-react-13199/

Posted by on Jun 9 2017. Filed under Analysis, Gold News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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