Shock election result sends Pound soaring
8 May, 2015
Last night’s election results look like returning David Cameron to Downing Street with an overall majority – and markets have responded with the Pound gaining strongly overnight.
The surge started at 10pm with the exit polls predicting some seemingly outlandish results, with Paddy Ashdown promising to eat his hat on television should the predictions come true, and even the Conservatives being cautious about the forecast showing them close to an overall majority. The poll has however proved to be accurate and now instead of a close result with Ed Miliband potentially becoming Prime Minister, we are now expecting his resignation instead.
For financial markets the result provides much more stability and certainty than we have been expecting in recent weeks. The Pound, which had been suffering in the lead up to the election, made immediate gains overnight against may currencies.
Attention will likely soon turn to the Conservatives’ promise of a referendum on Britain’s EU membership, as well as the increasing divergence between politics in Scotland and England. The referendum, not due until 2017, will probably cause significant movement for currencies, not least because of renewed uncertainty in the economy.
UK Trade Balance worsens
In a reminder of the fragility of the UK’s economic recovery, this morning’s trade balance figures came out worse than expected, at over £10bn for March. This afternoon we also have US non-farm payrolls, the main monthly labour market statistics for the USA, which normally causes movement for the US Dollar rate – one to watch if you are sending money to the USA.
There is nothing else major due to be announced today but of course the aftermath of the election is likely to dominate headlines for the coming days.
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