Lond410121

Pound showing increased volatility

 
     In recent days, the British currency is again under the pressure. The political risks associated with the upcoming elections are returning to the arena. According to the polls, the party Theresa May cannot get majority, as expected conservatives. This will seriously complicate work for the British Prime Minister on the exit of the country from the European Union.
 
     Brexit doesn’t promise to be easy. On the continent, don’t agree to make concessions to the United Kingdom, everything said that the negotiations will be hard and long. In addition, if Teresa May will not get the support from the parliament the situation will be further aggravated.
 
     Besides, the GDP of Albion for the first quarter showed weaker results, having decreased by 0.1% from previous estimates. On the one hand, may grow in the second quarter, and in that case the pound will receive significant support. If GDP remains at such low levels, concerns about the weakness of the UK economy together with the process of output from the EU will lead the sterling to decline without right to any serious correction.
 
     In such conditions for the Bank of England will be very difficult to save a soft monetary policy and ignore the growth of inflation, especially if it exceeds the critical level of 3%.