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DBS Group Research strategist Chang Wei Liang has highlighted increased volatility in the GBP/USD pair following its decline to 1.32, driven by uncertainty surrounding the Makerfield by-election. Labour candidate Andy Burnham currently leads in the contest, which could influence UK political stability and currency dynamics. The by-election outcome may signal broader political trends, impacting investor confidence and GBP demand.
This volatility is critical for forex traders monitoring GBP/USD, as political uncertainty often amplifies currency fluctuations. A Labour victory might reinforce market expectations of a potential general election, increasing GBP risk-off sentiment. Conversely, a Conservative win could stabilize the pair temporarily. Traders should watch for shifts in political narratives and subsequent GBP/USD movements.
For global markets, the by-election serves as a proxy for assessing UK political risks. If Labour gains momentum, it could pressure the Bank of England’s policy outlook, affecting interest rate expectations. Traders should also track related GBP cross-currency pairs and GBP-denominated assets for potential ripple effects.
