The United Kingdom is hosting the third national parliamentary election in the last four years. The new alignment of forces in the House of Commons should determine the vector of the country's development for the next five years and decide the fate of Brexit.
While Euroscepticist Boris Johnson is focusing on promises to withdraw Great Britain from the EU by January 31, 2020 without new delays or delays, his opponents show completely different views on the country's successful future.
In particular, the head of the Labour Party, Jeremy Corbyn, is promoting the idea of a second referendum on Brexit, which he plans to hold in the first six months after coming to power.
The Labour leader has already announced the nationalization of railways and British companies involved in energy and water supply in the event that he takes the prime minister's chair.
Liberal Democrats, led by Joe Swinson, intend to completely abandon the "divorce" from the EU.
For Prime Minister Johnson to be able to advance his plans for Brexit, which had to be postponed again in the fall, the Tories need to get an absolute majority in the House of Commons, that is, at least 326 out of 650 seats.
Despite the fact that opinion polls predict victory for Conservatives, even a small shift in the mood of voters can change the whole balance of power.
According to the Best for Britain organization, the votes of only 40 thousand people in 36 constituencies will be able to deprive the majority of the Tories.
According to experts, the election results will be crucial for the dynamics of the pound. In case of a negative scenario, the sterling could fall to $ .20, while it might grow to $1.35 in the opposite situation.
"The results of all recent polls confirm that the Conservative Party, led by Johnson, will be able to form an effective majority in Parliament, which will allow the prime minister to successfully implement the Brexit bill, and the pound to rise to the $1.33 area," Westpac said.
"The main issue is the scale of the pound rally in case of a consensus election result. With this outcome, the GBP/USD pair may reach 1.3500," Saxo Bank analysts said.
"It will not be easy for the pound to rise well above current levels in the near future if the Conservatives do not get a large majority in the House of Commons," the MUFG believes.
"There is still a lot of good news in the pound, as the most likely scenario is getting the majority of the Tories. Meanwhile, the Tory advantage of 20-30 or less places will not be so favorable for the British currency. This alignment of forces will make the new government more dependent on support from "hard" brexitors in negotiations on a free trade agreement with the EU," said MUFG strategist Fritz Lowe.
"The biggest surprise will be the coalition led by the Labour Party, which will not only hurt the pound, but also hit the UK government bonds," said Andrew Wischart of Capital Economics.
He predicts that in this case, the pound will plummet (possibly to $1.20).
According to estimates by Jordan Rochester, a Nomura specialist, the pound could fall 3% on news of a minority government led by Labour.
"The hung Parliament promises Britain a continuation of political chaos, and even the reduction of most of the Tories is fraught with bleak prospects. If Conservatives do not show good results, the pound could significantly weaken in the wake of disappointment. The news of an unstable majority of Tories in Parliament will send the GBP/USD pair to test the area of 1.2985–1.3015. A deeper correction is also possible - in the direction of 1.2880 and further to 1.2820," TD Securities experts noted.
Very soon we will find out whether the Tories will be able to win the majority of the votes. Otherwise, Prime Minister Johnson may lose his seat on Downing Street, and the party that wins will be given the right to form a government and determine what the UK's relationship with the EU will be.
The material has been provided by InstaForex Company - www.instaforex.com