The British pound has pulled back slightly in late European trading today against its US counterpart after surging on the back of upcoming elections in the UK and some predict this just the start of good things to come.
At 6.33pm (GMT) the British currency was trading at $1.2804 down from $1.2841 in yesterday’s trading.
In a shock announcement yesterday, British Prime minister Theresa may suddenly called an election which was overwhelmingly backed by the house of commons today and sets the stage for a big showdown.
CMC Markets analyst Michael Hewson has predicted that the pound could reach $1.33 over the next 3 months as investors warm to the idea of a landslide for Theresa May in the upcoming elections and the stability it will bring
“There is no doubt that she can win the election well so she won’t be held hostage by the French and the Germans in Brexit talks,”Mr Hewson said “
“We may have uncertainty over the short-term, but over the long term we will have more stability. The data has been holding up and there has been so much bad news already priced into the pound, which is why sterling has the potential to go higher.” he added.
Not all analysts are convinced that a snap election will solve the UK’s problems and believe that the EU will still be a tough case to negotiate with, which is likely to keep the pound under pressure as negotiations get underway,
“We still think sterling’s got a very rocky road ahead and even if Mrs May does get it all her own way come June 8, there’s no guarantee Europe will be any easier to deal with. The jury is out on whether we can squeeze higher from here, or whether we get a swift retracement.” Noted Brokers Hamilton Court FX.