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13 Apr 2015
UK political risks significantly under-priced – RBS
FXStreet (Barcelona) - With UK election outcome uncertainty continuing to keep GBP volatile, Ross Walker, Senior UK Economist at RBS, comments that the market is yet to price in the political risks associated with the upcoming elections.
Key Quotes
“The opinion polls remain very close and we caution against any ‘over-interpretation’. Nevertheless, the underlying data hint at the largest Labour lead for two months –marginal in percentage terms but enough to point to Labour winning the most Commons seats.”
“Previous Conservative momentum appears to have stalled and we are sceptical that the formal manifesto launches will trigger a more decisive move in the polls (parties often see a blip higher in polling around their autumn conferences but the close proximity of the manifesto publications means they will probably offset).”
“With Labour and the Conservatives still polling barely above historic bedrock support, we suspect that a more definitive move in the polls (if it comes at all) will be late in the day.”
“Betting markets continue to attach a high, and still rising, probability to a hung parliament (86% on Betfair). But the most striking change in betting market pricing is the sharp rise in the probability of a Labour minority government, now 34%”
“Overall, the UK election outcome remains too close to call. The latest polls and betting market pricing suggest previous Conservative momentum has stalled, but a slightly longer-term perspective (since the start of this year) suggests very little movement in voting intentions. If there is to be a more decisive shift among swing-voters it appears increasingly likely to come at a late stage.”
“Sterling has begun to wobble on the currency markets but UK political risk continues to look significantly under-priced.”
Key Quotes
“The opinion polls remain very close and we caution against any ‘over-interpretation’. Nevertheless, the underlying data hint at the largest Labour lead for two months –marginal in percentage terms but enough to point to Labour winning the most Commons seats.”
“Previous Conservative momentum appears to have stalled and we are sceptical that the formal manifesto launches will trigger a more decisive move in the polls (parties often see a blip higher in polling around their autumn conferences but the close proximity of the manifesto publications means they will probably offset).”
“With Labour and the Conservatives still polling barely above historic bedrock support, we suspect that a more definitive move in the polls (if it comes at all) will be late in the day.”
“Betting markets continue to attach a high, and still rising, probability to a hung parliament (86% on Betfair). But the most striking change in betting market pricing is the sharp rise in the probability of a Labour minority government, now 34%”
“Overall, the UK election outcome remains too close to call. The latest polls and betting market pricing suggest previous Conservative momentum has stalled, but a slightly longer-term perspective (since the start of this year) suggests very little movement in voting intentions. If there is to be a more decisive shift among swing-voters it appears increasingly likely to come at a late stage.”
“Sterling has begun to wobble on the currency markets but UK political risk continues to look significantly under-priced.”