Japan's Rich Embrace Family Offices Amid Market Boom and Weak Yen

Economic

Summary:

Family offices are growing in Japan for asset protection and tax planning, with recent expansions by Deloitte, Takashimaya, and Money Forward. This trend is fueled by rising wealth from a booming stock market and real estate prices.

Family offices are on the rise in Japan as business owners and their families seek a one-stop solution to concerns ranging from protecting family assets from inflation to tax planning.

Deloitte Tohmatsu launched family office services in Japan this month. That move was followed by department store chain Takashimaya's acquisition of Japanese wealth management startup Vaste Culture, which offers services including family offices and philanthropy.

Money Forward, an operator of popular money-managing apps, has begun offering family office services together with PrivateBank, a Tokyo-based family office operator. The partners set up a joint venture in March.

Family offices, which manage the assets of single or multiple families with a clear organizational vision and governance structures, are a relatively new concept in Japan. Business owners typically set up personal holding companies, but these often lack proper governance systems, such as a family constitution and a council for conflict resolution, and they do not have active investment strategies.

Game maker Nintendo's founding family was one of the first in Japan to make use of a family office. Yamauchi No. 10 Family Office was established in 2020 by Banjo Yamauchi, a fifth-generation member of the founding family.

"Instead of leaving investment activity to other people, we make investment decisions by ourselves and invest in companies that we think are promising, or are run by great managers," Hirowaka Murakami, chief investment officer at Yamauchi No. 10, told Nikkei Asia.

Yamauchi No. 10 has a staff of about 10 and manages assets between 100 billion and 200 billion yen ($627.5 million to $1.255 billion). Reflecting the growing interest in family offices, "we are often asked about how to set up a family office," he added.

Japan's Rich Embrace Family Offices Amid Market Boom and Weak Yen_1

Historically Japan has had fewer billionaires than other countries due to its high inheritance tax rates of up to 55%. In 2022, according to the UBS Global Wealth Databook, there were 1,094 Japanese with a net worth of $100 million or more, putting Japan 13th behind India, Russia, South Korea and Switzerland.

However, that may be changing thanks to a reflating economy and booming financial markets. Takayuki Sato, president of PrivateBank, is a close observer of this trend. Sato's PrivateBank offers services to dozens of wealthy families with at least 10 billion yen in financial assets.

"There has been an increase in wealthy individuals due to rising real estate prices, a booming stock market, more startups going public and more people making money with cryptocurrencies," said Sato, who doubles as the head of the joint venture, Money Forward PrivateBank.

Japanese stock prices have risen about 50% since the start of 2022, while Tokyo condominium prices are at an all-time high. Wealthy people today are much keener on investment than before because of the sharp depreciation of the yen, which has lost 27% of its value versus the dollar since the beginning of 2022.

"People's attitude toward money has changed in Japan," Sato said. "People no longer think it is a bad thing to want to increase their wealth. They think what's important is how the money is being used."

Many of his clients are owners of tech companies that went public within the last 10 years. By combining with Money Forward's network of tech companies and its expertise in mobile apps, PrivateBank hopes it can broaden its client base. Its goal is to oversee 10 trillion yen in assets in the partnership with Money Forward.

A Takashimaya department store in Tokyo: Vaste Culture, a wealth management startup, aims to find clients among Takashimaya's upscale customers. (Photo by Makoto Okada)

More recently, Vaste Culture, a wealth management startup, decided to join the Takashimaya group, betting that the upscale retailer's customers will make good clients. It provides a range of services, from wealth management to arranging overseas education for family members to advising on philanthropic giving.

"We are aiming to manage 1 trillion yen in assets," said Kotaro Yamamoto, Vaste Culture's co-CEO. The partnership with Takashimaya will give the company's clients opportunities to invest in artworks and jewelry, he added.

Koh Shimizu, deputy head of Sumitomo Mitsui Trust Bank's private banking department, underlines the company's commitment to the startup sector -- which might pay off in the form of more revenue from initial public offerings and from managing wealth for startup owners. The company's private banking department serves individuals with at least 1 billion yen in financial assets. Sumitomo Mitsui Trust owns a stake in PrivateBank.

"Japan's economy has been led by big traditional companies," Shimizu said, "but startups are increasingly playing an important role as well."

His customers include startup founders, second-generation owners as well as venerable public companies. "We want to meet clients' needs, which include wealth management services for the founding family," he said.

Shimizu added that his bank is preparing for the possibility of startups growing bigger and turning into unicorns, companies worth $1 billion or more.

Japan's Rich Embrace Family Offices Amid Market Boom and Weak Yen_2

Generational change among business owners is also fueling the growth of family offices.

Ryosuke Higuchi, head of Deloitte Tohmatsu Family Office Services, said many of the wealthy households that Deloitte serves own medium-size companies, typically with at least hundreds of millions of dollars in sales and more than 1,000 employees.

These companies are predominantly owner-managed. "It is often the case that owner-owned companies experience governance issues as soon as something happens to the founder," Higuchi said. He added, "It is more prudent to institute a decision-making structure" before such issues arise.

Family offices are relatively new to Asia, gaining momentum around 2010, when the smartphone revolution produced scores of billionaires in China, some of whom diversified their investments across the region and set up family offices in places like Singapore and Hong Kong.

Money Forward estimates there are 15,000 to 20,000 family offices worldwide. In Singapore, there were around 1,400 single-family offices that qualified for tax incentives as of the end of 2023, according to the city-state's government. Hong Kong, using its own tallying method, estimates there were 2,700 single-family offices.

"The number of family offices in the region has nearly quadrupled in the past five years, according to Preqin data," said Harsha Narayan, senior financial writer at Preqin, an investment data company. "The region is witnessing a rapid growth of wealth. This growth has created more demand for family offices to manage the needs of these newly wealthy families," Narayan said.

Since last year, the Japanese government has set out a policy plan aimed at making Japan a leading asset management center. The plan aims to stimulate the economy by utilizing personal assets that have been sitting idle due to low interest rates in the country.

Yamauchi No. 10, the family office of Nintendo's founding family, invests in deep tech companies that use cutting-edge technologies to address major social issues. Its target companies are endeavoring to create direct brain-machine interfaces, explore for rare earths with the help of artificial intelligence and develop lab-grown meat using tissue culture technology.

Murakami, Yamauchi No. 10's chief investment officer, expects to see more startups and family offices in Japan. In the past, bright people in Japan became civil servants. Today, he pointed out, "There are many people who leave the civil service to join startups.

"There are also many who quit jobs at investment banks and consulting firms to join startups. That led me to believe that the pace of economic renewal is gaining momentum in Japan," said Murakami, himself a former Goldman Sachs banker.

Source: NikkeiAsia

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Kevin Du

Cryptocurrency

Bitcoin posted one of its steepest drops on Monday, driven by weak demand for exchange-traded funds holding the cryptocurrency and uncertainty over monetary policy.

Developments in the US, including the presidential debate and inflation figures, could further affect Bitcoin price movements this week, according to experts.

The largest digital asset shed as much as 8.1 per cent to $58,528 on Monday, the biggest intraday decline since April 13, before settling at $59,191.39.

The token stabilised on Tuesday, rising roughly 3 per cent to retake $61,000. It was trading at $60,964.95 at 9.50am UAE time.

The leading token by market value is down 12 per cent so far this month. It remains sharply higher for 2024, however, after ending last year below $43,000. Bitcoin hit a record of $73,798 in March.

Adding to fears of increased selling pressure, the rehabilitation trustee of Mt. Gox – the Japanese crypto exchange that was hacked more than a decade ago – announced that it would start repayments of Bitcoin and Bitcoin Cash in July, which means more Bitcoins may hit the market soon.

"The world's largest cryptocurrency is seeing cooling demand for Bitcoin ETFs and uncertainty over US interest rates. Ongoing developments concerning the failed Mt. Gox exchange rubbed salt into the wound, with a negative mood enveloping the crypto space," said Lukman Otunuga, senior market analyst at forex trading broker FXTM.

The Biden vs Trump presidential debate on Thursday and the Fed's preferred inflation gauge on Friday could rock Bitcoin. Any mention of crypto policy during the debate or an inflation report that shifts Fed cut bets could inject Bitcoin with more volatility, Mr Otunuga added.

It has been a tumultuous few years for the global digital asset sector, which entered a "crypto winter" in 2022 after the collapse of a number of large platforms including Celsius, Three Arrows Capital and Sam Bankman-Fried's FTX.

The prospect of higher-for-longer interest rates is also weighing on the cryptocurrency market.

The anticipated interest rate cuts by the Federal Reserve this year could inject more liquidity into the market. The monetary easing is likely to benefit high-risk assets like Bitcoin, similar to post-pandemic economic stimulus measures.

Excitement about US spot Bitcoin ETFs flatlined after earlier lifting the token to a record high of about $74,000 in March.

The Securities and Exchange Commission has approved 11 spot Bitcoin ETFs as of January, including those from major players like BlackRock, Ark Invest and Fidelity. These ETFs were expected to significantly increase demand for Bitcoin by making it more accessible to institutional and retail investors alike. Why is Bitcoin Price Going Down?_1

The Bitcoin network underwent a halving in April, a four-yearly event that reduces new supply of the token and which some analysts view as a bullish precursor.

However, the supply curbs failed to provide much of a discernible prop for prices.

This latest sell-off is attributed to the financial strain on Bitcoin miners, who have offloaded more than $2 billion worth of Bitcoin this month to offset dwindling revenues, according to Mohamed Hashad, chief market strategist, Noor Capital.

"The root of the miners' woes lies in the Bitcoin halving event in April, which slashed their rewards by half," Mr Hashad said.

"This, coupled with the decreasing difficulty rate – a measure of the computational effort required to mine a Bitcoin block – has led to record-low revenues for miners. Many smaller operations have been forced to shut down, intensifying the selling pressure on Bitcoin."

More than $210 million worth of bullish bets in crypto were liquidated in the past 12 hours, according to data compiled by tracker Coinglass.

Bitcoin investment products saw around $600 million in outflows for a second consecutive week, the most over a two-week period since the US approved ETFs to hold the largest cryptocurrency in January.

"The cryptocurrency's decline has negatively affected the ETF market. While Bitcoin ETFs had been instrumental in driving Bitcoin's price to new highs earlier this year, the recent sell-off has triggered an outflow of around $200 million from these ETFs," Mr Hashad said.

"Despite the current gloomy outlook, some experts believe that the selling pressure could ease once the mining industry stabilises. However, for now, the downward trend persists, dragging both Bitcoin and its associated ETFs into uncertain territory."

Overall, digital asset products were hit with $584 million in outflows in the week ended June 21, data from CoinShares International shows.

Bitcoin products accounted for the majority, with $630 million in outflows coming in the wake of another $600 million the prior week.

Source: The National News

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Glendon

Economic

The SPDR S&P 500 ETF (SPY) is a behemoth in the investment world, mirroring the performance of the S&P 500 Index, a benchmark for the US stock market. But for active traders seeking to capitalize on short-term market movements, SPY stock futures offer an alternative avenue for exposure. This article delves into the intricacies of SPY stock futures, explaining their mechanics, advantages, risks, and how they can be used in your trading strategy.

Understanding SPY Stock Futures

Regular SPY shares represent ownership units in the SPDR S&P 500 ETF, which itself holds a basket of stocks mirroring the S&P 500 Index. SPY stock futures, however, are contracts that obligate the buyer to purchase (or the seller to sell) a specific number of SPY shares at a predetermined price on a future date. These contracts are traded on exchanges like the Chicago Mercantile Exchange (CME) and are settled in cash, meaning the difference between the agreed-upon price and the prevailing SPY price at settlement is exchanged.

Benefits of Trading SPY Stock Futures

Leverage: Futures contracts allow for leverage, meaning you can control a larger position in the market with a smaller initial investment compared to buying regular SPY shares. This can magnify potential profits but also amplify losses.

Hedging: Investors holding stocks in their portfolio can use SPY stock futures to hedge against potential market downturns. By selling futures contracts, they can lock in a profit (or minimize a loss) if the market falls.

Short Selling: Unlike buying SPY shares, which represents a long position betting on price increases, futures contracts allow you to take a short position, profiting if the market declines.

24-Hour Trading: SPY stock futures contracts are traded almost around the clock, allowing you to react to market events outside regular stock market hours.

Risks Associated with SPY Stock Futures

Leverage: While leverage can amplify gains, it can also lead to significant losses if the market moves against your position.

Margin Requirements: To hold a futures contract, you need to maintain a minimum deposit, called margin, with the broker. Failing to maintain the margin can lead to a margin call, forcing you to close your position or deposit additional funds.

Volatility: Stock futures are inherently more volatile than underlying assets like SPY shares. Price fluctuations can be significant, leading to rapid changes in your account value.

Counterparty Risk: There's a risk that the other party to your futures contract may default on their obligation, potentially leading to financial loss.

Trading Strategies with SPY Stock Futures

Trend Following: This strategy involves buying futures contracts when the market is trending upwards and selling them when a downward trend emerges.

Scalping: Short-term traders can exploit small price movements in SPY futures for quick profits by entering and exiting positions frequently.

Arbitrage: This strategy involves capitalizing on price discrepancies between SPY futures and the underlying SPY ETF. However, arbitrage opportunities are fleeting and require sophisticated trading algorithms.

Who Should Consider Trading SPY Stock Futures?

SPY stock futures are best suited for experienced traders who understand the risks involved and have a well-defined trading strategy. They require a high level of discipline, risk management skills, and the ability to react quickly to market changes. Beginners are generally advised to start with buying and holding regular SPY shares before venturing into futures contracts.

Conclusion

SPY stock futures offer an exciting avenue for active traders seeking to leverage market movements and potentially magnify returns. However, the inherent risks associated with leverage and volatility necessitate a thorough understanding of futures contracts and a well-defined risk management strategy. Before diving into SPY stock futures, it's crucial to carefully assess your risk tolerance, trading skills, and investment goals. Consider consulting with a financial advisor to determine if this trading vehicle aligns with your overall investment strategy.

To stay updated on all economic events of today, please check out our Economic calendar

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Cohen

Economic

Commodity

Gold prices inched down on Tuesday as investors awaited the release of key U.S. inflation and gross domestic product (GDP) data later this week for more insights into the Federal Reserve‘s interest rate cut stance.

In the UAE, gold prices saw an AED0.25 decline with 24-carat gold inching down to AED281.75 per gram, while 22-carat gold remained stable at AED261. Twenty-one-carat gold declined to AED252.50 while 18-carat gold reached AED216.50.

Globally, spot gold saw a 0.11 percent decline to $2,328.41 per ounce, as of 5:11 GMT. Meanwhile, U.S. gold futures lost 0.17 percent to $2,340.35.

U.S. economic data’s impact on bullion

Gold prices declined over 1 percent on Friday after U.S. business activity rose to a 26-month high in June amid a rebound in employment which supported a rise in the dollar index.

First-quarter U.S. GDP estimates are due on Thursday and the personal consumption expenditures (PCE) price index report on Friday. If PCE data reveals an increase in inflation, gold prices may decline below the $2,300 level. The Federal Reserve also awaits the release of both indicators to gauge the level of economic health and the timing of the next interest rate cut. Lower rates reduce the opportunity cost of holding non-yielding assets like gold.

San Francisco Federal Reserve Bank President Mary Daly said on Monday that she does not believe the central bank should cut interest rates before policymakers are confident that inflation is on track to 2 percent. However, she also noted that rising unemployment is increasingly a risk.

Other Fed officials speaking this week include Fed Governors Lisa Cook and Michelle Bowman in addition to Richmond Fed President Tom Barkin.

Other precious metals

Despite the decline in gold prices, the metals market saw mixed movement on Tuesday. Spot silver declined 0.38 percent to $29.52. However, platinum rose 0.83 percent to $1,002.65 while palladium gained 1.25 percent to $991.37.

Source:Economy Middle East

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Kevin Du

Cryptocurrency

Donald Trump has taken a commanding lead over Joe Biden - in the world of political meme coins, at least.

Crypto tokens linked to former President Trump have leapt in volume and value in recent weeks as the November U.S. presidential election heaves into view and the arch-rivals prepare for their first public debate.

The universe of the so-called "PolitiFi" tokens is tiny, with a combined market value of about $1 billion. A majority of those are linked to Trump, who has presented himself as a champion for cryptocurrency although he hasn't offered specifics on his proposed crypto policy.

Of the top 10 political meme coins by market value, seven are based on Trump, with many playing on Trump's Make America Great Again slogan, such as MAGA and MAGA Hat, according to crypto platform CoinGecko, while only one - Jeo Boden - is related to President Biden, CoinGecko data shows.

The largest token linked to a political figure, MAGA, trades under a ticker called TRUMP on exchanges and was launched in late August 2023. Its market value has leapt as high as $775 million in June from nearly nothing at the start of the year.

By comparison, Jeo Boden, which launched in March this year, jumped to as much as $648 million days after its launch before gradually sliding to $87 million.

Forrest Przybysz, a cryptocurrency trader and CEO of Sistine Research, says meme coins by their nature are not only highly speculative but also driven by attention cycles.

"The more attention a token can hold and maintain, usually the higher it's price will go ... he added. "Trump is an attention magnet. Therefore he is the ideal subject for a meme token."

"We should expect price and speculation on a Trump-based meme token to rise as we get closer to the election."

Political tokens are a fraction of the $46 billion market value of meme coins - hyper-speculative, volatile and risky cryptocurrencies often driven by internet jokes - which are themselves a niche segment of the broader $2.3 trillion cryptocurrencies, per Coingecko estimates.

The origins of some of the tokens are obscure and debated on social media by traders wary of a "rug pull", where investors deposit money in phony projects only to find the coin's developers have vanished with the money.

Of the top 10 biggest political tokens, which typically aim to capitalize on the increased attention on political figures ahead of elections, eight were launched between May and June this year, CoinGecko said.

"Meme coins are similar to nonfungible tokens in terms of being a bit of collectors' item. The idea is that you monetize public attention," said Yan Liberman, co-founder at crypto research firm Delphi Digital.

However, trading these tokens is easier said than done. Few, if any, are listed on the biggest centralized exchanges such as Coinbase or Binance. Most of the tokens are traded in ether or solana pairs on smaller exchanges, each typically have a market value of below $100 million and trade for fractions of a cent apiece. Trump Drubs Biden in Meme Coins_1

Questionable Legitimacy

Biden and Trump are neck-and-neck in national opinion polls. A presidential debate between the two candidates on Thursday will be a critical event five months before the Nov. 5 vote.

Traders on Polymarket, a crypto site where users place bets with stablecoins on future events, were betting on a 59% chance that Republican challenger Trump would unseat Democratic incumbent Joe Biden.

Political tokens bank on the popularity of political figures to gain traction, enticing retail investors with satirical or humorous names: "Funny is certainly an authentic big driving force of which tokens do well," said Delphi Digital's Liberman .

Trump hasn't said he endorses or backs any crypto token in his name. However, his slamming of Democrats' attempts to regulate the sector has boosted his popularity among these tokens, Liberman said.

The broader crypto industry is spending tens of millions of dollars ahead of the U.S. election to boost crypto-friendly candidates. Investor twins Tyler and Cameron Winklevoss donated $2 million in bitcoin to support Trump last week but a report said the donation was refunded as it exceeded the maximum amount allowed under federal law.

Analysts at Bitfinex said: "These tokens have turned into speculative assets themselves in terms of the election results."

Source: Reuters

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ING

Forex

USD: Action is elsewhere until Friday

The dollar continues to lack a significant trend and remains to the topside of a two-month trading range. US interest rate volatility remains subdued and that means interest has resumed in the yen-funded carry trade. USD/JPY continues to hover just below 160 as the yen softens again, while some of the big beasts hit hard on the recent carry trade unwind – e.g., the Mexican peso – continue to recover. It seems that there is not quite enough bad news to justify short positions in expensive currencies like the Mexican peso. Additionally, the low volatility environment makes it more difficult for Japanese authorities to intervene at 160. We suspect they had been hoping for the US rates cycle to turn lower by now and be the key driver of a lower USD/JPY.

Instead, the dollar remains sidelined ahead of two key event risks later this week. Thursday night sees the first presidential debate between President Biden and Donald Trump on CNN. It may be too early to expect this, but we will want to see whether the dollar responds to who 'wins' the debate. A positive outcome for Trump could see the dollar edge higher. But the bigger market mover this week will be Friday's core PCE inflation read. Should it meet expectations of a 0.1% month-on-month reading, we suspect the short-end of the US curve can come lower and take the dollar with it. However, most of any dollar downside will be felt against the likes of the Australian dollar and the Norwegian krone, rather than against the euro.

The US data calendar is quiet today apart from what is expected to be a modest dip in US June consumer confidence. DXY to trade well within a 105.00 to 106.00 range.

EUR: National Rally says the right things

French:German yield spreads have narrowed a little and the euro has edged up after representatives of France's National Rally (RN) party have said the party will respect the nation's budget rules. However, the plan to cut EUR7bn in taxes still seems to exist – partially funded by slashing France's contribution to the EU budget. Our eurozone macro team sees continued stress here and we would therefore warn against chasing EUR/USD back to and over 1.08, since there are still many possibly bearish chapters to play out here. One of those could be the Leftist Alliance doing a little better than expected in Sunday's elections. And while bond investors will welcome soothing words from the RN about France's budget trajectory, our team suspects it is too early for the party to be making significant concessions to its manifesto.

We therefore expect that the euro will struggle to sustain a rally over the coming weeks and that key euro cross rates, such as EUR/AUD and EUR/NOK, will come lower. These moves should accelerate should US inflation indeed come in on the low side.

EUR/USD may therefore struggle to break to the topside of its 1.0660-1.0760 range.

GBP: Sterling rates look priced too close to the US

Looking at forward curves, it is remarkable that UK interest rates remain priced so close to the US. Both price around 45bp of rate cuts this year and both have a terminal rate for forthcoming easing cycles around the 3.30/3.40% area. Our conviction view this summer is that UK rates will be repriced lower starting with a rate cut in August. And this should lead to a lower pound.

We will not hear anything more from the Bank of England until after the 4 July general election now. But thereafter, we would be looking for the more dovish members of the seven who voted for unchanged rates last week to make their voices heard. Uncertain developments in the eurozone suggest EUR/GBP may struggle to break back above 0.8490 in the short term. But a cross rate like GBP/NOK could come lower over the next month if both US rates come lower and the BoE doves emerge in July.

CAD: More disinflation, more cuts

Canada publishes CPI data for May today, and we expect another inflation slowdown in line with consensus expectations. Headline CPI is seen decelerating from 2.7% to 2.6% year-on-year and the core inflation metrics may also keep inching lower.

This is the second big piece of Canadian data since the Bank of Canada cut rates on 5 June. Earlier this month, jobs data showed a slowdown in hiring in May, with unemployment ticking higher and full-time employment dropping.

The Canadian dollar has been trading gradually stronger since the June cut, largely on the back of generally supportive sentiment, higher oil prices and distance from the EU political turmoil. Still, as we expect three more rate cuts by the BoC this year, we continue to expect the loonie to be a laggard in the pro-cyclical space this summer.

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Warren Takunda

Economic

Forex

Robert Howard, a Reuters market analyst, says a rise to post-Brexit highs would be due to a combination of outcomes involving the French and UK elections.

"EUR/GBP could slide to 0.80 for the first time in eight years if Emmanuel Macron's centrist alliance does worse than expected in a French parliamentary election and the UK's pro-business Labour Party wins a 'goldilocks' majority next week," says Howard.

A fall in Euro-Pound to 0.80 would give a Pound to Euro exchange rate conversion of 1.25. The last time Pound Sterling commanded such a purchasing power was in 2016 when the UK voted to leave the European Union.

"A worse-than-predicted showing from Macron's centrist alliance would raise the prospect of either the far-right National Rally or left-wing New Popular Front unexpectedly winning a National Assembly majority – a shock which could hit the euro hard," says Howard.

Current polling suggests such an outcome is unlikely, with no party on track to score a majority. This would deliver a 'hung parliament', whereby no major changes would be enacted.

Howard says political paralysis after the French election might also be negative for the euro, "especially if accompanied by civil unrest or violence".

Pound Sterling Could Sling-shot 1.20 against Euro Says One Analyst_1

Above: EUR/GBP could fall to 0.80 (GBP/EUR to 1.25) says a market analyst.

To be sure, losing control of the legislature is not ideal for the reformist agenda of Emmanual Macron, but it is by no means a worst-case scenario for the Euro.

In fact, we have seen the Euro recover over recent days as markets prepare for such an outcome and the tail-risk of a majority for either the far left or far right fades.

"The pound, meanwhile, may benefit if Labour's expected majority is perceived to be neither too big nor too small," says Howard. He explains this would mean a majority of "perhaps around 160 seats".

Pound Sterling Could Sling-shot 1.20 against Euro Says One Analyst_2

Above: "GBP looks too strong relative to some cyclical indicators" - HSBC.

However, an analysis from HSBC says the UK election will be a non-event for the Pound.

"We are not convinced that the upcoming elections would necessarily be positive for GBP. Instead, we believe GBP remains beholden to rates and will likely be on a path of gradual weakness in the coming months," says Paul Mackel, head of FX research at HSBC.

Mackel says that with poll results largely in Labour's favour, the market is likely already positioned for such a result. Some analysts argue a Labour government would be more pro-EU, but HSBC questions what that would mean.

For example, closer alignment on defence and veterinary issues are hardly game changers. Instead, the UK would need to head towards joining the EU customs union, which Labour has ruled out.

HSBC thinks interest rates and the Bank of England ultimately matter. "GBP's strength is stretched," says Mackel, "the start of the BoE’s easing cycle should be a catalyst for a reassessment of the currency."

HSBC forecasts Pound-Dollar to end the year at 1.25, and Euro-Pound at 0.84 (Pound-Euro at 1.19).