27.11.201900:39 Forex Analysis & Reviews: Pound expects Conservatives to win, but also keeps "suspended" Parliament in mind

The volatility of the pound against the US dollar remains high in anticipation of early parliamentary elections in the UK.

Voting can result in many options: from the release of Great Britain from the European Union without a deal, to a second referendum and maintaining the country's membership in the bloc.

The GBP/USD pair rose above the level of 1.29, but could not develop an upward movement and updated local lows in the region of 1.2850.

According to the latest Kantar opinion poll, Conservatives continue to outpace their key rivals, the Labour Party, but this gap narrowed by 7%.

Compared to the previous week, the advantage of the Tories was reduced from 18 to 11%. Support to Conservatives was expressed by 43% of respondents, and by Labour - 32%.

The pound will win if the Tories get a majority in the December elections, but only temporarily, Rabobank experts say.

"GBP/USD may rise to 1.32 in response to the Conservative victory due to the expectation of a reduction in political uncertainty. However, given the risk that trade negotiations between the United Kingdom and the EU will not be as easy as British Prime Minister Boris Johnson has indicated, we see many opportunities for disappointment in 2020. Most likely, many moderate Conservative deputies will be replaced by hard-wired brexiters, which means that the threat of disordered Brexit may return at the end of next year after the transition period," they noted.

UBS experts, in turn, believe that GBP/USD will be stuck in a narrow range if the election does not reveal a winner.

"If the election results lead to a suspended Parliament, we expect Article 50 of the Lisbon Treaty to be renewed again, followed by a second referendum on Britain's exit from the EU. If this scenario is realized, the GBP/USD pair will be traded in the band of 1.25–1.30," they said.