GBPUSD News by Newsroom on 05:04 June 09, 2017 EST
In a note produced ahead of the election the bank noted:
“Brexit is still likely to feel rather hard insofar as it is liable to circumscribe the UK’s single market access, even if the change in the electoral timetable should temper the tail risk of an outright disorderly Brexit in 2019. We do not expect any real relief rally in sterling on a Conservative victory as Brexit negotiations are due to commence shortly after the election and investors will be wary of the headline risk that will accompany these.”
The bank adds,
"An argument can be made that a hung parliament which delivered or held out the prospect of a softer-Brexit coalition of the left-of-centre parties (Labour/Lib Dems/SNP) might actually be GBP positive. FX investors might not exactly embrace various aspects of the Labour party’s domestic policy agenda (the renationalisation of certain sectors, a large fiscal expansion), but they could potentially live with these as the price of a less disruptive Brexit under a government that was more willing to preserve the status quo on free movement of labour and trade (the Lib Dems have also committed to holding a second referendum on the final terms of a Brexit deal)".