Election Day Arrives

7 May, 2015

Simon Eastman

Yesterday surprisingly saw the pound do fairly well against most of the major traded currencies and although we did see some fairly large swings in the rates along the way, the start and end of trade figures were relatively equal.

This was the case in most, but not all as we saw the euro, yet again, make dramatic gains against sterling, ending 1 ½ cents more expensive at the close of play. In the reverse story, the US dollar lost ground against the pound finishing just over a cent worse off and nearly 2 cents lower against the rallying single currency.

The reason behind the pounds jitters is the election, where we are due today to go and cast our vote for who we want to run the country. With markets pretty much resound to the fact it’s likely to be a messy outcome it seems this has been priced into the market hence why sterling didnt fall drastically yesterday helped by some positive Markit services PMI beating forecasts. The euros rise to stardom was somewhat a surprise, especially following poor German PMI data in the morning and lower than expected EU retail sales figures, but with news that Greece have managed to scrape the coffers enough to make their repayment it seemed the markets didnt care and investor sentiment was firmly with the single currency. Across the pond the release of unemployment data, mortgage applications and a speech by Janet Yellen from the Fed all seemed to go against the greenback, with the ecostats all missing expectations.

So onto today and the election is finally here. As millions of us go to booths around the country to cast our vote how will the pound fare? We have little data of real note or even if it was, it’s unlikely investors will be taking much notice. German factory orders, UK Halifax house price index and some US jobless claims figures and consumer credit this afternoon is all we have to digest today. But will it be the calm before the storm for sterling or will it be a volatile day ahead as we will have to wait until Friday to get the first indications of the vote and see how it will mould the markets. It could be a tricky couple of days so if you haven’t already taken the plunge make sure to contact one of the CI team sooner rather than later to tie up your transfer.