We have decided to take a look at how GBP/USD has performed over the last five elections. We have also investigated how the UK GDP performs under various parties by analysing the last five governments. See the results below, it is worth noting that past performance does not guarantee future performance.
Overall, it looks like the FX market is fairly immune to UK elections, with GBPUSD dropping under both the Conservatives and the Labour Party. In 1992 the UK went through a recession, which weighed on the pound, and likewise in 2008-2010, during the Great Financial Crisis. It appears that external circumstances, rather than who is in power, usually determines how well the pound performs.
Factors other than politics may also influence UK GDP, as you can see in figure 2. However, the Conservatives now have a track record of bringing the UK out of deep recessions, whereas the Labour Party had the misfortune of leading the UK into its worst period for GDP since the 1930s. We will have to wait and see if this can help the Tories come May 7th.
Overall, it looks like the FX market is fairly immune to UK elections, with GBPUSD dropping under both the Conservatives and the Labour Party. In 1992 the UK went through a recession, which weighed on the pound, and likewise in 2008-2010, during the Great Financial Crisis. It appears that external circumstances, rather than who is in power, usually determines how well the pound performs.
Factors other than politics may also influence UK GDP, as you can see in figure 2. However, the Conservatives now have a track record of bringing the UK out of deep recessions, whereas the Labour Party had the misfortune of leading the UK into its worst period for GDP since the 1930s. We will have to wait and see if this can help the Tories come May 7th.
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