Tuesday morning Prime Minister Theresa May announced a snap election for the 8th June, perhaps encouraged by a wide lead in the opinion polls. This still needs to be voted on in the House of Commons tomorrow and is likely to be passed given other parties have openly supported an early election.
Aberdeen Asset Management Investment Manager Luke Bartholomew added that market reaction has been muted so far and agreed that the election result could provide further clarity around the type of Brexit that is negotiated.
He said: “No one was expecting this. Not least because the Government itself ruled an election before 2020 out barely four weeks ago. But Theresa May has clearly smelt an opportunity to consolidate her mandate ahead of the Brexit negotiations.
“The market reaction has been muted so far. Sterling sold off initially and has now come back. But it will take investors some time to digest the effects of the election in the next few days. A big factor for them is whether the election will make a softer stance on the Brexit negotiations more likely. The election should hand Theresa May a much bigger mandate to stand up to the harder line, anti-EU back-benchers which currently hold a disproportionate sway over her party’s stance on Brexit. That would be welcomed by financial markets. There’s also a decent chance of some volatility now with imminent elections in both the UK and France.”
This article was originally published by Investment specialist at Parmenion Capital Partners.
