U.K. Election Is One Pit Stop in Long Brexit Road for Pound, Markets
- Pound may struggle to rise above $1.32 even on Tory win
- Trade deal risks in 2020 may boost rate-cut odds above 50-50
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Sterling’s rally will be limited even if U.K. Prime Minister Boris Johnson wins a parliamentary majority in the general election and finds a way to pass the withdrawal bill by Jan. 31. That’s because the clock is ticking on a trade agreement in a transition period that runs out at the end of 2020. Any longer-term economic and Brexit uncertainty can increase the chance of a Bank of England rate cut next year, which would weigh on the currency and prop up gilts.