The UK has been subjected to political head winds since June 23rd 2016 after the Brexit referendum.

Prior to the referendum, world leaders and economic commentators both from within the UK and from other parts of the world had rallied their support for the people who wanted the UK to remain within the EU.

On a trip to the UK before the Brexit vote, President Obama told reporters that the UK should vote to remain in the EU; or it would find itself at the back of the queue on matters to do with future trade agreements.

However, majority of the British people were of a different opinion; with 51% of them voting for Brexit and triggering the downfall of the sterling pound. Factors affecting the value of the Sterling pound Immediately after the Brexit vote, the sterling pound exchange rate plunged from the highs of GBP/USD 1.4789 to the lows of 1.3253.

The downward trend has continued since then to date; with the British pound touching the lows of GBP/USD 1.2040 on 17th January 2017.
This falling trend has been subjected to a lot of volatility due to changing political scenes from both within the UK and across the world; hence creating an opportunity for individuals to benefit from the currency fluctuations by trading through forex brokers like Avatrade UK.

Geopolitical realignments globally also have had their own good share in the volatility experienced by the sterling pound.
Five months after the Brexit shock on the UK economy, the US voted in President Trump as their 45th president; a turn of events that shocked the whole world since it was expected that Hillary Clinton would have a smooth sail to the Oval Office.

With uncertainty gripping the US with regard to potential radical policy changes that President Trump would introduce; the sterling pound had a short rally immediately thereafter rising from GBP/USD 1.2389 on 8th November 2016 to GBP/USD 1.2574 on 14th November 2016.

The presidential elections in France have also had an impact on the sterling pound exchange rate due to the uncertainty on which candidate will eventually win the elections.
Emmanuel Macron is a pro-EU, while Marine Le Pen is representing people who hold the nationalistic perspectives and are anti-EU.

With the race between the two becoming tighter, and having learnt from previous surprises in the Brexit vote and the US elections; markets are now jittery and hence contributing to the volatility of the British pound.

UK Snap elections and their impact to the economy On 18th April 2017, the UK Prime Minister Theresa May opted to dissolve parliament and call for a snap election that is to be held on June 8th 2017.

This came even after she had earlier on declared that she would not have a general election in the UK until 2020.

However, with the ongoing Brexit negotiations, Prime Minister May will need more support to go on with her preferred hard Brexit stance.
To achieve this, she will need a higher majority in the parliament than the current 330 seats that her Conservative party has.

Riding on her popularity, Prime Minister May expects to get more seats in parliament for the Conservatives through a general election, in order to have higher voting power on issues regarding Brexit.
May’s approval rating stands at about 60%; which makes her the most popular Prime Minister since 1970s.

The general elections to be held in June will however be a true test of her popularity among the public; since she was elected into office by parliament after Prime Minister David Cameron left office following the Brexit vote.

Markets reactions to snap elections After Prime Minister May announced the snap elections on 18th April 2017, the sterling pound rallied upwards from GBP/USD 1.2558 to GBP/USD 1.2845 on 19th April 2017.

Since then the exchange rate fluctuation has been experiencing small margins; but it is expected that as the Election Day draws closer volatility in the forex market will also rise. The stock market reacted differently after May’s announcement of a general election.

On the day of the announcement, the FTSE 100 fell by 180.09 points which was a drop of 2.46% in a single trading day; equivalent to 46 billion sterling pounds being wiped off the market in one day.

The stock market has since recovered although just like in the forex market; there is high price volatility due to the upcoming snap elections.

The increased market volatility causes a lot of anxiety for long-term investors due to the value their wealth lose when the markets fall. However, on the other hand it creates more trading opportunities for online forex and CFD traders; who capitalize on the price fluctuations to optimize their daily returns when trading.

Therefore, as the political environment gets more charged going forward towards the snap elections; we expect traders to be the overall winners, as investors take more conservative positions.