In the wake of Theresa May’s election gambit defeat, the Brexit negotiations and the strategies that had been put in place by her government have been thrown into a quagmire. Voters were not convinced with Brexit thus the only option for Tories to remain in power is through a coalition between the Democratic Unionist Party (DUP) – a North Ireland party.
Two major camps formed prior the election enabled brokers to withstand the election storm. The camps comprised of those who were able to raise margin requirements and those who were unable to. Indices were not affected by the vote as popularly perceived.
Theresa May wanted authorization from the UK voters to carry out the Brexit negotiations which appears weaker as compared to how it was before the election. Two months down the line, May is contending to keep the government together as she seeks her mandate for the negotiations.
Missing a seat in the government meant that the UK Independence Party had a single option – forming a coalition with the DUP. This option though viable, was uncertain.
Barely winning the vote, Theresa May is motivated to form a government that comprises of two seats if DUP decides to join the Tories.
Election’s impact on the market – 1 minute mayhem
The publication of exit polls lead to the drop of over 2 percent across the long positions. This came as a surprise to the brokers who were unable to raise margin requirements after 10:00 PM BST the previous day.
Lack of liquidity at the said moment affected a number of positions negatively. No material complaints have been raised by the brokers concerning execution. This is after the systems have been stress tested for the same events.
Theresa May Government and Hard Brexit
Tories played the hard Brexit government card therefore have to adhere to the manifesto which it debuted during the campaign. Theresa May having lost the majority votes has no choice but to listen to each and every government critic within her rank. This poses a huge challenge in her endeavor to form an effective government.
The voters having chosen a soft Brexit over a hard one, Theresa was left with little confidence to engage in the critical negotiations. Currently, the British pound, with the Prime Minister in power, is not in favor of the hard Brexit scenario.
High Brexit Skepticism versus Hung Parliament
According to the British pound, the UK is in a very difficult position as it gets ready to begin two years of intense Brexit negotiations. There is no definite majority to take lead in the negotiations and very minimal time left for UK politicians to come to an agreement with the EU.
Although Labor has promised a soft Brexit, the leader is more inclined towards the populist Left. Theresa May – the lead negotiator in the EU negotiations – left for Buckingham Palace to seek a mandate to form a government.