FX.co ★ Theresa May’s surprise general election announcement pushes pound to new highs

If you are a prime minister of some economically advanced country, then almost any of your statements can seriously affect the financial markets. Some politicians use it in the interests of their country, some have no idea how to take advantage of this potential opportunity, and others simply has no influence on the global economy.

Prime Minister of Great Britain Theresa May belongs to the first category. Her announcement that the country is ready to hold a snap parliamentary election in June caused a stir in the foreign exchange market. The pound sterling gradually advanced against majors, while shares of British companies went to a tailspin. The FTSE 100 index slid by 2.5 percent, which was the strongest intraday fall after Brexit. An early election is not an uncommon event, but this news was so unexpected for the financial markets that it triggered a strong response: shares are falling, the pound is growing. Oddly enough, market participants have seen an opposite picture quite recently. "The worst-case scenario for UK stocks, at least in the immediate term, is that elements from across the current opposition parties unite to use the election to call for a new referendum. That would add to the existing uncertainty that the general election creates," Richard Hunter, head of research at stockbroker Wilson King said.

Still, analysts believe that there will not be any dramatic changes in the composition of the Parliament. The Conservative Party currently has very high ratings, which means it will secure a majority coalition. Apparently, Theresa May thinks that this step is necessary as she is confident in the victory of her party.