# They think it’s all over, but is it now? Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2017-06-13 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: UK Election Update: Sterling Soars, FTSE Crashes. How Will Market Fare? Meta Description: Explore how the UK election outcome could affect the market, from a potential Corbyn win to a stronger May majority for a 'hard Brexit'. Stay URL: https://financedigest.com/they-think-its-all-over-but-is-it-nowhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/wm2a8319-1561-1-1736843771512-compressed.jpg) _By **James Trescothick**, Senior Global Strategist, easyMarkets_ ![James Trescothick](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/profile-pic-2-300x300-1736843771413-compressed.jpg) James Trescothick **Is the UK election a foregone conclusion and how could it affect the market?** As the [market returned](https://www.financedigest.com/swiss-bank-ubp-returns-to-chinese-markets.html "Swiss bank UBP returns to Chinese markets") from its Easter break on the 18th of April, UK Prime Minister Theresa May surprised the world with an announcement of a snap UK election to take place on the 8th of June.  The financial market reacted with the [sterling](https://www.financedigest.com/boohoo-says-exposure-to-sterling-plunge-is-limited-finance-chief.html "Boohoo says exposure to sterling plunge is limited – finance chief") reaching a 6 -month high against the USD, while the FTSE 100 crashed, losing 46 billion pounds. The [boost in the GBP was down to the markets anticipation](https://www.financedigest.com/increased-spending-on-foods-is-anticipated-to-boost-demand-of-flour-market-fact-mr-research.html "Increased Spending On Foods Is Anticipated To Boost Demand Of Flour Market, Fact.MR Research") that the outcome of the election on the 8th of June would see a landslide victory for May’s Conservative party putting her in potentially a stronger position with the EU, once Brexit negotiations officially start.  The FTSE100 collapse was caused by this sudden [rise in the sterling](https://www.financedigest.com/sterling-rises-0-5-as-dollar-takes-a-breather.html "Sterling rises 0.5% as dollar takes a breather") as it hit the value of overseas earnings. Now, with only days away from the UK populous heading to polling stations, the [market is not so sure of the outcome](https://www.financedigest.com/world-stocks-slip-as-markets-await-u-s-midterms-outcome.html "World stocks slip as markets await U.S. midterms outcome"). [Opinion polls](https://www.financedigest.com/p2p-investors-polled-on-their-thoughts-and-opinions-on-risks-vs-rewards.html "P2P Investors Polled on Their Thoughts and Opinions on Risks vs Rewards") have started to show that Conservatives are commanding lead over their arch rivals. The Labour party has slowly started to diminish. Most recent poll show that the Tories are 42% to the Labours 39%. Some statistics have even shown that Labour leader Jeremy Corbyn could pull a Trump and achieve a shock victory.  In fact, the odds of him winning have gone from 14/1 to 4/1. These latest numbers are in complete contrast to the view back on the 18th April when it looked like a home run for Theresa May.  With a series of missteps such as the so-called Dementia tax and criticism for her nonappearance on the BBC’s [live TV debate](https://www.financedigest.com/macron-le-pen-clash-over-cost-of-living-in-french-election-debate.html "Macron, Le Pen clash over cost of living in French election debate"), has really taken the wind out of May’s sails. The 8th of June is building up to be another potential Trump like shock. With that in mind, how could the market react? Below are some of the scenarios that could happen. **A Labour and Corbyn win** Ok, despite the recent changes in opinion polls the, general consensus is that an overall Labour win is unlikely. However, if 2016 taught us anything, it is to never rule anything out. If Labour did indeed win you might see the sterling come under a lot of [pressure falling](https://www.financedigest.com/euro-zone-yields-fall-as-us-payrolls-seen-easing-rate-hike-pressure.html "Euro zone yields fall as US payrolls seen easing rate-hike pressure") as low as $1.20 against the US dollar, due to the fact that Corbyn is not seen as a strong opposition for the EU. This could lead to the UK walking away with a rough deal. **A Conservative and Theresa May win, with a small majority – Less than 20** If this was to occur, we could also see a strong sell-off of the pound, as Theresa May will still be lacking the strength behind her, which would lead to worries over a “hard Brexit”. A Conservative and Theresa May win with a larger majority – 50 plus This outcome could see a far more positive impact on the Sterling as the [market could see that Theresa May will be in a commanding position to negotiate better terms for UK’s exit](https://www.financedigest.com/analysis-oil-prices-turn-more-volatile-as-investors-exit-the-market.html "Analysis-Oil prices turn more volatile as investors exit the market") from the EU. The [British pound](https://www.financedigest.com/british-pound-drops-as-investors-seek-safety-on-freedom-day.html "British pound drops as investors seek safety on ‘Freedom Day’") against the US Dollar could possibly challenge the key level at $1.30. **Hung Parliament** If on the 9th June we wake up to this result, we could see total chaos.  Hung parliaments make passing legislation extremely difficult for the party in power, as all the other parties can team up and prevent any [laws it wants to pass](https://www.financedigest.com/bbc-halts-reporting-in-russia-after-new-law-passes.html "BBC halts reporting in Russia after new law passes").  The sterling is likely to crash on this outcome. Why? Because with this result [securing any deal with the EU will prove to be very difficult as any set](https://www.financedigest.com/u-s-russian-officials-set-for-security-talks-on-january-10-u-s-official.html "U.S., Russian officials set for security talks on January 10 – U.S. official") direction for negotiations will be lost amongst all the bickering that will very likely occur between all the parties in the commons.  The GBP/USD [rate could once again fall](https://www.financedigest.com/stocks-fall-as-strong-u-s-payrolls-muddies-rate-bets.html "Stocks fall as strong U.S. payrolls muddies rate bets") as low as $1.20. Nothing is ever certain. The experiences of 2016 are a testament to that.  In reality, the markets are just as unpredictable as elections and nobody knows what will happen. One thing is to be expected; in the early hours of the 9th of June markets will be alive and kicking. [https://www.easymarkets.com/eu/](https://www.easymarkets.com/eu/) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---