Blog


Election Polls Key For Sterling

The pound was pretty static this morning as investors calculated the risks which the upcoming general election poses to Britain’s ability to sign a trade deal with the European Union before Jan. 31, its new deadline to leave the EU.

Traders also waited to see what the Bank of England (BoE) might have to say regarding the impact of Brexit on the British economy, after its meeting on Thursday.

Uncertainty around Britain’s departure from the EU has left a strong mark on business confidence and weak economic data makes it increasingly likely that BoE’s next move will be to cut interest rates, rather than an increase.

But money markets do not expect the central bank to cut rates in the near term until more clarity emerges on the political front.

Sterling was last flat against the dollar and the euro respectively. It gained more than 5% last month as traders wound off their short positions on the currency in the hope that a no-deal Brexit was averted.

With the BoE set to hold the key benchmark rate unchanged at 0.75% on Thursday and the general election less than six weeks away, investors will be watching closely any changes in opinion poll trends for the major political parties before adding positions on the pound.

The central bank must also contend with prospects of the Dec. 12 election yielding another hung parliament, which could drag the Brexit debate beyond Jan. 31, the third deadline for Britain to leave the European Union.

The pound’s short-term fate depends almost exclusively on polls.

Anything but a solid majority for the Tories could possibly weaken the British pound more significantly, as the resulting scenarios would be rather incalculable.

Leave a Reply

Your email address will not be published. Required fields are marked *

What's Going On?

Currencies 4 You Ltd is a company registered in England and Wales (registered no. 06866898). Registered office: Regus House Victory Way Admirals Park, Crossway, Dartford, Kent, DA2 6QD. Currencies 4 You Ltd’s Payment and Foreign Currency Exchange Services are provided by Ebury Partners UK Limited. Currencies 4 You Ltd is partnered with Ebury Partners UK Limited as its Programme Manager. Ebury Partners UK Limited are authorised and regulated by the Financial Conduct Authority as an Electronic Money Institution. (Reference Number 900797). | Terms and Conditions | Privacy Statement | Careers