The Pound has traded tightly against the US Dollar today as the nation goes to the polls. Looking ahead, there could be a chance for major GBP USD gains, once the dust has settled.
Could a UK Election Upset Bring Future Gains for Sterling?
The Pound could crash if the Conservatives do not secure a majority in the UK general election, but Sterlig may still appreciate in the future despite this.
If the most improbable of events occurs and the vote brings a hung parliament, a ragtag coalition could end up in a favourable light when it comes to Brexit.
The previous Conservative message on Brexit has been that ‘no deal is better than a bad deal’. This implies that a Tory-led government would aim for ‘Hard Brexit’, which is considered an economically turbulent option for the UK.
On the other hand, most of the other main parties (excluding UKIP) are looking for a more moderate form of Brexit, that retains UK trade and political ties to the EU after exiting. If a non-Conservative government becomes dominant and aims to have a ‘Soft Brexit’ rather than hard, then the Pound could appreciate.
Brexit negotiations will begin on June 19th, so traders may not have long to wait before the intentions of the new government are known.
Are Future US Dollar Losses Incoming on Plans to Sue Trump?
The next US Dollar influencer could be a high-profile one, consisting of Democrat efforts to sue Donald Trump for conflicts of interest.
Democratic Party officials in the House of Representatives and the Senate are claiming that Trump’s continued ties to his international properties violate the US constitution.
The specific issue is an emoluments clause, which is meant to prevent a president from taking payments or other gifts from foreign governments.
Because Trump still has links to his international hotels and businesses, the Democrats argue, any spending by foreign government officials could constitute a gift or payment.
While the fine details of the lawsuit still need to be worked out, this charge against Trump could be yet another drag on confidence in his leadership. Such a knock could weaken US Dollar demand, as it would be yet another mark against Trump’s already turbulent political career as national leader.
Recent Interbank GBP USD Exchange Rates
At the time of writing, the Pound to US Dollar (GBP USD) exchange rate was trading at 1.2954 and the US Dollar to Pound (USD GBP) exchange rate was trading at 0.7719.
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