Recently, it seems to me where wo fiona liupolitics are concerned, the mantra is “expect the unexpected”. Theresa May made the biggest gamble in her career by forcing a snap election to widen her party’s majority and it backfired. Once again, the early polls got it wrong.

 

Fiona Liu

Research Analyst

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So what now? Today will be fast moving as they fight to form a new Government. Theresa May will be seeking permission to form a UK Government with the support of the Democratic Unionist Party (DUP). All we know is that no two days are the same in politics; it wasn’t too long ago when the Labour party tried to oust Jeremy Corbyn and now he could potentially be the next prime minister!

As the likelihood of the hung parliament became clear, the Pound fell against the Dollar and Euro. This no doubt contributed to the FTSE 100 surging ahead this morning as a majority of the companies make their earnings overseas. A falling Pound could lead to higher inflation and the uncertainty leading to an increase inflow into Gold. As the market did not predict a hung parliament, I would expect to see volatility in the coming days/weeks as politicians try to form the next Government.

We are already in unchartered territories with Brexit and the result of the election has thrown us even more off course. How Brexit plays out will depend on how the Government is formed. A Conservative majority would have meant business as usual and Theresa May steaming ahead with a “hard Brexit”. Brexit negotiations are due to start on 19th June, with many uncertainties on the horizon; this could also be delayed.

Personally, I am not surprised at the results – from my own social media, I saw the majority of posts supporting Labour from young voters as they see education and the NHS as being the most important to them. There is a striking resemblance between Hillary Clinton and Theresa May’s campaign. Whilst they were predicted to win, they lost because the people didn’t trust them. May’s U turn on dementia tax made her look indecisive and her proposal to change the pension’s triple lock to double lock could have cost her votes from the older generation.

We have seen many such events over the years, however it is important to remember to not make rash decisions which you may later regret, and have a diversified portfolio. Timing the market is notoriously difficult. At times like these, we need to remind ourselves why we invested in the first place and focus on our long term goals.

Have a great weekend – I’ll be trawling through social media wondering whether this is all just fake news!

 

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Important Information: Willis Owen does not give investment advice so you will need to decide if an investment is suitable for you. If you are unsure whether to invest, you should contact a financial adviser.

 





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