Christopher Graham, economist at Standard Chartered, suggests that the recent UK political developments have prompted them to revise their Brexit-related probabilities with the most likely outcome according to our probability tree is no-deal (48%), ahead of a deal (32%) and remain (20%).
Key Quotes
“These are conditional end-state probabilities and are dependent on the following assumptions:
- We now think the prospect of a delay beyond 31 October is highly likely (80%), while the probability of a deal being reached (10%) or the UK leaving without a deal (10%) by this date are low-risk events.
- We assume an extension request will be accepted by the EU. Following this, we assume an early general election (GE) will be called, most likely for late November/early December.
- Based on recent polling, we think the Conservative party has a c.40% chance of winning a majority and being returned to government, most likely resulting in a no-deal outcome. A Labour-led government (either a majority or in an electoral pact) also has a 40% chance of coming to power and would most likely opt for a second referendum. We attach a 20% probability to either a hung parliament or minority Conservative government.
- Given these electoral probabilities, we view the prospect of a no-deal (40%) and a second referendum (40%) by end-January 2020 as high, while there would still be a small prospect of a deal being reached with the EU (20%).
- If a second referendum is called, we think Remain (60%) would have an advantage over both leave options – deal (20%) and no-deal (20%).”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.