The last 12 months have been packed full of major political events. And these events have all had an impact on the markets. I can’t remember a time when so much was happening in such a short period!
The next major event looks like it will be the U.K election.
So what impact will this have on the markets? Will there be as much volatility as we saw during Brexit and the U.S presidential election? I don’t think we’ll see the same amount of sharp movement in the markets, but there still could be some interesting trading opportunities.
Here’s a run down on some of the scenarios that we could see:
Currently the polls are predicting the Conservatives will win, and will increase their number of seats. Markets are pricing this in as a good thing. The reason being is that people believe this will make it easier for Theresa May to push through Brexit measures. This should make the negotiating process with the E.U more predictable.
Labour and Lib Dems
If Labour or the Lib Dems increase their seat count, this could make the brexit process more convoluted. The Lib Dems want to hold another referendum. While the chances of this happening are tiny, if it does we may see the value of the pound increase. The more uncertainty around whats happening with Brexit will create more volatility on the markets.
If the SNP pick up more seats, there would be an increased chance that a second Scottish referendum on independence may take place. On the other hand, if they lose seats to the Conservatives, the value of the pound may increase due to the perceived stability it will bring.
Markets to Watch
Obviously the pound is where most eyes will be watching. We could see a rally in the pound if the conservatives win alternatively if the polls get it wrong, and they got it horribly wrong in the last election, we could see some major volatility.
How to Trade
If you’re just getting started with trading forex and fundamental analysis, then why not put your skills to the test with a practice trading account. You get to trade under real market conditions, but won’t risk any real money. Do you think you’ll be able to profit from the U.K election.
If you’re looking to trade real money, I would suggest copy trading. Pick a trader on etoro who trades any GBP pair. They’ll have more experience in being able to profit from this event. And when they profit, so will you 🙂