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Jun 21 - 08:55 AM

GBP/USD - COMMENT-If Johnson's 'blue Wall' Crumbles, So Might Sterling

By Rob Howard  —  Jun 21 - 07:04 AM

June 21 (Reuters) - Sterling traders as well as psephologists will watch for any signs of a shift in the UK's political tectonic plates following last week's by-election shock in a former 'blue wall' stronghold.

If the Liberal Democrats build on their unexpected victory in Chesham and Amersham - which Prime Minister Boris Johnson's Conservatives had held comfortably since its creation in 1974, it could raise the stakes for GBP at the next general election. nL5N2O021N

The current consensus view is that the Conservatives will win another majority at that election (which is at least 23 months away).
Should the Conservatives fail to win a majority in 2023/2024, it could open the door to a rainbow coalition led by Labour and including the SNP - the price of whose support would be a green light for another Scottish independence referendum.

The next by-election test for the Conservatives is in Batley and Spen next week (July 1).
Odds quoted by Ladbrokes suggest Johnson's party has a 73% chance of winning the seat from Labour.

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