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Sterling stunned by UK election shock

Friday, June 09, 2017 - 01:36

Sterling spiralled lower on Friday as British elections left no single party with a clear claim to power, sideswiping investors who had already weathered major risk events in the United States and Europe. As Sonia Legg reports,with the majority of seats counted in the snap vote, British Prime Minister Theresa May had no way to win an outright majority in parliament

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It couldn't have been much worse for Theresa May or the markets. Investors dread uncertainty - they got little else. (SOUNDBITE) (English) ETX CAPITAL SENIOR ANALYST NEIL WILSON SAYING: "I think we want to see stability in the domestic political scene, especially at this really important moment when we are heading into Brexit negotiations and we need to have a government that is really fit for heading into that and the risk is that if we have a coalition or we have a minority government we just dont have that stability at home to take on Brexit ." It soon became clear the ruling Conservative party had lost its majority and the odds of May remaining as Prime Minister had been significantly cut. In contrast the prospect of the labour leader Jeremy Corbyn forming a coalition and possibly even leading it became far less fanciful. (SOUNDBITE) (English) ETX CAPITAL SENIOR ANALYST NEIL WILSON SAYING: "We will also see maybe the FTSE, some volatility there, especially around some of these stocks that have been highlighted in the Labour manifesto as being potential nationalized entities should Labour get its way." Sterling shed as much as three US cents at one point overnight - close to two per cent - and yields on 10 year gilts dipped three basis points. Outside Britain the euro slipped and bond yields hit multi year lows after the ECB said it had not discussed scaling back its massive bond buying campaign. And Wall Street rose after the testimony of former FBI Director James Comey was judged not life-threatening to President Trump's administration. Britain's leader may be wishing the same could be said about the UK election.

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Sterling stunned by UK election shock

Friday, June 09, 2017 - 01:36