December 10, 2019

High Volatility Alert during United Kingdom General Election

Here are the things to expect from United Kingdom General Election.

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High Volatility expected by United Kingdom General Election

We would like to inform you that on Thursday 12th December 2019, the United Kingdom will be holding a General Election.

This is a major event which is expected to cause many adverse conditions in the market, such as price gaps, price spikes, lack of liquidity and widened spreads.

We would advise you to ensure that you have sufficient funds in your account and remind you that it is your responsibility to manage and monitor your account closely.

Many financial companies are taking all necessary measures in order to ensure a continuously safe trading environment for all investors.

Trading Conditions may be changed temporarily

In light of the above there may be a possibility for margin requirement increases, as well as restrictions on new trades for GBP currency pairs and Indices.

Please note that any increase in margin requirements will also apply to pre-existing trades.

Therefore, once again, we strongly advise you to lower any unnecessary risk and keep your accounts well-funded in the event that you wish to take positions forward during the upcoming event.

For more information about the changes, please contact support team of your brokers.

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What to expect from United Kingdom General Election?

The two political parties in the UK have been battling it out since late November to see who will come out on top in the latest election, which is happening next Thursday, 12 December 2019.

How does the UK General Election affect your trades?

There is a big chance markets will act in a volatile way, before, during, and sometime after the elections.

That means there will be higher risks of gaps happening in all of the GBP pairs as well as the FTSE 100.

This may lead to lots of opportunities that you as a trader can capitalise on.

However, the risks are also quite high as the gaps might lead to your account being liquidated because of the increased volatility.

What should you do?

We advise you to firstly have sufficient funds in your account, as this allows you to withstand any adverse direction in the market.

Secondly, it’s good to keep an eye on the markets, especially if you’ve got any positions open which would be affected by the elections.

As volatility might hit sky-high levels, your brokers may increase margin requirements, as well as restrict availability to certain trades and order types during the time of the election.

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The UK Elections – 3 Scenarios for the GBP

The British pound rose above $1.30 during the first week of December, reflecting the market hopes.

Traders anticipate the outcome of the UK elections on December 12, wishing the victory of the Conservative party.

But still, the possibility of a hung parliament worries investors and traders, leaving them confused about where to position their portfolios.

There are three different scenarios for the potential outcomes of the election and how it affects the British pound.

If the UK Prime minister Boris Johnson won and the Conservatives secured a majority, the GBP would climb around $1.35, according to major analytical banks.

Johnson offers certainty in Brexit with his market-friendly policies.

The second scenario is an idea of a hung parliament.

In that case, the GBP would drop back to $1.25.

If Mr. Johnson stayed in his position but with a minority government, we would be back to another political deadlock.

Finally, if Mr. Jeremy Corbyn won, even it is unlikely to happen, the pound would fall to $1.20. Labour majority wound mean less Brexit mess but higher market risk.

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