An end to the rumors that weighed on the pound: Theresa May met the press and announced general elections for June 8th. The press conference was announced only two hours in advance and was accompanied by many rumors.
Theresa May seeks a new mandate to pursue Brexit. Brexit negotiations would have been hampered by a later vote, says the Prime Minister.
GBP/USD bounces back on the news. The uncertainty about the announcement is over, but many questions remain open.
Election Motivation
In her press conference, Theresa May lays out the achievements of her government, maintaining stability despite the Brexit vote.
May discusses the exit out of the EU but complains about the disagreement in Westminster and goes on to attack her political rivals in both the House of Commons and in the House of Lords. She says her party will get the job done.
She explains that she previously rejected holding an early election but has reluctantly reached the conclusion that there is no other way. She will need a two-thirds majority to dissolve parliament.
It is an opportunity to enlarge the majority of the Conservatives in parliament as well as to get rid of some opponents from within. Some of her Brexiteer colleagues have been problematic, namely Boris Johnson, the Foreign Secretary, which is seen as a disgrace by many.
GBP/USD buys the fact
GBP/USD responded with a sharp drop to 1.2515 on the rumors but then recovered and is trading around 1.2580.
May’s Tories command a huge lead over Corbyn’s Labour Party and May is also personally quite popular.
Here is how the move looks on the pound/dollar chart. Resistance is at 1.2620 and 1.27. Support awaits at 1.25 and 1.2450.
More: GBP: Sell Rallies – Citi
