Yes

>>Political Risk to the Pound: The Unseen Danger Sabotaging Sterling’s Data‑Driven Rise

Political Risk to the Pound: The Unseen Danger Sabotaging Sterling’s Data‑Driven Rise

crypthub

about 10 hours ago

Economic Strength and Political Headwinds

The UK economy shows solid fundamentals: Q4 GDP grew 2.3%, unemployment sits at 3.8%, inflation hit the BoE’s 2% target and manufacturing PMI stayed above 50 for eight months. Normally such data would boost the pound, but markets are muted. OCBC flags upcoming elections, trade‑deal uncertainty and regulatory reforms as political factors that outweigh the economic tailwinds.

Pricing Political Risk

OCBC’s Political Risk Index assigns high scores to policy unpredictability, leadership stability and international relations, creating a risk premium that discounts sterling’s gains. Historical cases like Brexit and the 2022 leadership changes show political turbulence can drive the currency lower despite strong data. The index suggests that foreign investment, portfolio allocation and central‑bank expectations now react first to political signals.

Implications for Traders

Market participants should embed political calendars into their models, monitor legislative progress and adjust hedging for event‑driven volatility. Diversifying away from GBP during election cycles or using volatility options can mitigate risk. Combining political risk assessment with traditional fundamentals is now essential to capture any upside in sterling.