Boris poll pushes Pound higher
29 November, 2019
Sterling moved back to near the top if its recent trading ranges yesterday, following a reputable poll overnight predicting a Conservative majority of 68 seats at the election in a couple of weeks’ time.
There was a fresh high for the Pound against the Euro since May, and GBP-USD was close to achieving the same feat. Whatever your political views, financial markets do like certainty, and the Pound is currently benefitting from the consensus that we may, just maybe, see a new Parliament sign off Johnson’s Brexit deal before Christmas with a smooth transition period ahead for 2020.
On the other hand, the Guardian reported that if the increase in Labour’s support over the last week is extrapolated to December 12th then we would see a hung parliament, and the risk remains that polls can be wrong, momentum can shift, and a hung parliament would be very likely to send sterling spiralling back down to its summer levels. Labour will now reportedly be targeting Leave-voting constituencies with new messages focussed on the NHS and cost of living; and as Theresa May proved in 2017, a healthy lead in the opinion polls can quickly turn into a close-run vote – so if you are waiting for exchange rates to improve further, be aware of the risk of events, and rates, moving in a different direction in the next fortnight.
Even with a Conservative majority, there will quickly be serious questions over Boris’s pledge to conclude a new trade agreement with the EU before the end of 2020, and the Pound could well be hampered by those concerns in the coming months, even if a no-deal Brexit is avoided in January.
Data calendar quiet for the month end
We’re not quite sure how it’s December already on Sunday, but the economic calendar is quiet as we see in the end of another month. Yesterday only Eurozone business climate figures and German inflation were released of note, the former coming in worse than expected and helping to send the Euro a little cheaper. Today we have Eurozone inflation at 10am and Canadian GDP at 1.30pm, and with no major UK data of note at all due next week, it could well be that opinion polls are the main driver of exchange rate movements from now until the election on the 12th.
Do speak to us at Currency Index if you have any upcoming international payments to make as we head into the Christmas period, so we can keep you updated with the latest news on exchange rate movements.
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