According to the first exit polls, we are in for another shocking election result in the UK, as the ruling conservative party is on track to lose it’s majority; as a consequence of an election that was called by none other than PM Theresa May to strengthen the power of the government. While the polls have been tightening progressively, as we noted in our pre-election analysis, the results, should the exit polls turn out to be correct, is a huge surprise that might cause a major sell-off in British assets, while boosting safe-haven assets.
GBP/USD, 4-Hour Analysis
The Pound fell to a 7-week low against the Dollar and a 5-month low (-1.5%) against the Euro in the first half hour after the releases of the exit-polls. Safe-haven assets are rallying on the news as expected, with the Yen, Gold, Bitcoin all being up. BTC rallied by 2%, while gold is still stuck below the $1285 resistance despite the initial rally. The Euro is also down against the Yen and the Dollar, as the results increase uncertainty in the region and could disrupt the already messy Brexit process.
BTC/USD, 5-minute Chart
If the exit polls are right, we could be in for a period of risk-off sentiment in global markets, with a further rally in traditional safe-haven assets. Bitcoin and other cryptocurrencies could also be slightly boosted by the uncertainty. That said, the long-term reaction should be muted globally, but British assets might remain under pressure until the new government forms and the effects on the Brexit-process become clearer.