Market so far remain fixated to troubles in the Euro zone and focusing on potential Grexit and overlooked the high possibilities of an exit of Britain from European Union.
- David Cameron has conveyed that he will put the membership of UK in European Union on a referendum vote to be scheduled in 2017.
- Recently it was suggested that the vote could be brought forward, should the current conservative party win the election.
- Britain differs with the European Union's target for a financial transaction tax, single market & various regulatory positions.
- UK faces election this year, so far set for May 7, 2015.
- Major contenders are the current government or the conservative party led by Mr. David Cameron and labour party led by Mr. Ed Milliband.
- Recent poll shows that conservative part showing only slight majority.
Analogy -
- Both the election & the referendum are expected be very volatile event for the market. This was so far grossly ignored until recently.
- In recent future, the cost of insurance against three months volatility in pound soared to 10.4 percent against the dollar, highest in three years as observed in the option market.
- Cost of insurance against soared to 11.57 percent, highest since 2011.
Pound is expected to face headwinds as the day close by.


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