Exchange rates higher as election result confirmed

With the election results still coming in, it’s announced Boris Johnson and his Conservative party have won a majority.

With this predicted in the exit polls last night, we saw sterling jump 2.5 percent against both the euro and US dollar, dropping back before gaining again overnight as it became clear the exit poll was correct.

This means the Conservatives have a clear path to “get Brexit done” as they can pass the required legislation to leave the EU at the end of January. We saw Labour seats move to Tory, where they leaned towards Leave in the referendum, showing the UK public, like Boris, wanted to get on with Brexit which has been rolling on for the last three years. The opposition parties, who led their campaigns on stopping or delaying Brexit have seen the people vote against them, with Lib Dem leader Jo Swinson losing her seat and stepping down as an MP.

In Scotland, the SNP did well as expected, where most voted to remain in the referendum. Nicola Sturgeon, the SNP leader, has been quoted as saying she will now look to hold another independence referendum, but needs Parliament’s sign off to do so.

Despite the results, the pound has settled this morning back to key resistance levels and only time will tell whether sterling can make further ground against its counterparties. With Britain now due to leave the EU on the 31^st January 2020, the markets will now be concerned with how future trade deals are negotiated, so the big gain we have seen overnight, may be it for now until we see how Brexit actually pans out once we leave.

For those with a currency requirement in the coming weeks or months, might want to take advantage of the new highs we are at now and lock into a rate on a forward contract. You can do this for just 10 percent of the total trade value and set the delivery and settlement date anything up to 2 years away. For more detail, speak to one of our currency consultants today.