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UK Prime Minister Theresa May surprised the markets last week by calling a snap election for June 8, claiming that divisions in parliament are hampering her party’s Brexit negotiations.

“The country is coming together, but Westminster is not,” Prime Minister May said last week, adding that political divisions “will risk our ability to make a success of Brexit.”[1]

The announcement came less than a month after the prime minister triggered Article 50 of the Lisbon Treaty, the formal mechanism for exiting the European Union (EU).

The call for an early election was supported by a total of 522 Members of Parliament. Just 13 voted against it.

Analysts described May’s announcement as a U-turn, given the prime minister’s previous pledge not to call an early election. The Conservatives won a slim majority in 2015, so another election was not due until 2020.[2]

A victory in June would not only solidify May’s personal mandate as prime minister after replacing David Cameron, it would potentially give the Conservatives a stronger hand in upcoming negotiations with Brussels.

May has made it abundantly clear that her government will pursue a ‘hard Brexit,’ leaving little room for continued membership of the EU. Negotiations are expected to last at least two years. Although the U.K. government has expressed the desire to maintain free trade relations with the EU, that likely won’t be possible without key concessions that would run contrary to the Conservatives’ platform.

Early polls have revealed that around half of British voters support the prime minister’s decision for a June election, according to surveys conducted by YouGov, Opinium and ComRes. Based on those polls, the Conservatives have the support of between 45% and 50% of Britons. However, ComRes chairman Andrew Hawkins has warned that the upcoming election may have unpredictable results given the strong likelihood of low voter turnout.

“It is nonetheless a particular challenge in an election which may be marked by low turnout and thus bring about unpredictable and possibly surprising individual constituency results,” he said.[3]

The British pound surged following May’s announcement, making gains not seen in almost three months. Sterling briefly traded above $1.2900 U.S. last week. It has since consolidated around $1.2800 U.S.

[1] Danny Boyle and Jack Maidment (April 18, 2017). “Theresa May announces snap election on June 8 to ‘make a success of Brexit’.” Telegraph UK.

[2] BBC (April 18, 2017). “UK snap election: Five things you need to know.”

[3] “Conservatives see strong support in UK ahead of snap election.”

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