PA ANALYSIS: A Tory win or big trouble for markets

It was going well for Theresa May in April, when a Tory landslide seemed guaranteed and ‘strong and stable’ passed as an original, punchy soundbite, but what happens if recent polls hinting at a strong Labour showing are right?  

PA ANALYSIS: A Tory win or big trouble for markets

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However, Belshaw still favours the currency and added: “In the medium to long term, we see the real effective exchange rate of sterling between $1.50-$1.60 and we favour being overweight the currency.”

JP Morgan’s James Illsley, manager of the JPM UK Equity Core Fund, said: “As we have seen through the referendum last year, sterling will act as a natural shock absorber for the market.”

Mark Dowding, partner and co-head of investment grade debt at BlueBay Asset Management, said any result other than a Tory win would spell trouble.

“With financial markets relatively complacent with respect to the outcome, there is a risk that gilts and the pound see a nasty move weaker, should there be a surprise outcome,” he said.

Equity markets may weather the storm, at least according to UBS Wealth Management who said the FTSE will not fall victim to the negative post-election trend, but investors should be prepared for more volatility in the pound, and perhaps even within Whitehall itself.