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21 Apr 2015
UK election could bring back bouts of volatility – Danske Bank
FXStreet (Edinburgh) - Chief Analyst Arne Rasmussen at Danske Bank expects the sterling to be under increasing downside pressure ahead of the elections due on May 7th.
Key Quotes
“The USD has weakened against most currencies in recent weeks and particularly against commodity currencies”.
“The sell-off in Greek assets currently has a relatively modest impact on global asset markets and thereby on currencies”.
“With the exception of the Eurogroup meeting in Riga on Friday where expectations of a Greek resolution have been scaled back, the global calendar is empty this week, suggesting falling FX volatility”.
“However, we expect the UK election on 7 May to be a source of global FX volatility and GBP weakness, as there is a very high risk of a hung parliament”.
“Typically, the GBP only weakens in the last two weeks before the election, i.e. from 23 April, and we see no reason for it to be different this time”.
Key Quotes
“The USD has weakened against most currencies in recent weeks and particularly against commodity currencies”.
“The sell-off in Greek assets currently has a relatively modest impact on global asset markets and thereby on currencies”.
“With the exception of the Eurogroup meeting in Riga on Friday where expectations of a Greek resolution have been scaled back, the global calendar is empty this week, suggesting falling FX volatility”.
“However, we expect the UK election on 7 May to be a source of global FX volatility and GBP weakness, as there is a very high risk of a hung parliament”.
“Typically, the GBP only weakens in the last two weeks before the election, i.e. from 23 April, and we see no reason for it to be different this time”.