Issue Of The Week: The Election And The City

Investors are calculating that a win for Theresa May may mean a “softer” Brexit. They shouldn’t count on it

Theresa May has rubbished the idea of a snap election so many times, said Kate Allen and Roger Blitz in the FT, “that investors were left with no choice but to assume that the UK and the pound were heading for a long period of Brexit uncertainty”. All that changed on Tuesday, when the PM “took financial markets and Westminster off guard” with her announcement of a 8 June poll. In the words of Deutsche Bank’s George Saravelos – hitherto “one of the most bearish sterling strategists” – the move was “a game changer” for sterling. The pound promptly jumped to a five-month high, breaking out of the $1.20-$1.27 range it has been anchored to since mid- October. The FTSE 100 headed in the opposite direction, suffering its worst one-day loss since last year’s referendum.