An outright Conservative majority is likely GBP bullish – Citibank

Analysts at Citi Group present various likely outcomes for the Dec 12 UK election and its implications for the pound.

Key Quotes:

“An outright Conservative majority would likely see PM Johnson being able to pass his Brexit deal as the base case outcome before year-end (likely sterling bullish). PM Johnson has indicated that the UK Parliament will be summoned on December 17 if he wins a majority and the Queen's speech - which marks the formal start of a new government - will take place December 19.

If it is a different government, then the Queen's speech is expected in January. This means that hypothetically, a Brexit deal could pass the House of Commons before Christmas and well before the January 31 deadline.

But even the second most likely outcome is likely GBP positive - an economically constrained Labor + Lib-Dem + SNP supply & confidence agreement opens the door to a People's Vote without No Deal on the ballot paper. 

A hung parliament, on the other hand, would likely be GBP bearish but looks highly unlikely if this week's polling is on the mark.”