Liquidity Holds Up Well as UK Exit Poll Surprises

Market sources say that liquidity in FX markets has held up well following the shock exit poll from the UK general election indicating a much bigger majority for the ruling Conservative Party than expected.

Cable jumped from 1.3170 to 1.3350 immediately following the poll, but has since climbed steadily to 1.3500, while EUR/GBP fell from 0.8458 to 0.8287 – approaching levels last seen in the immediate aftermath of the Brexit vote in June 2016.

The exit poll on behalf of the BBC, ITV and Sky News predicted an 86 seat majority for prime minister Boris Johnson, way above even the most optimistic pre-election poll and signalled the next UK Government will likely force Brexit through early in the new year.

Traders say volume and liquidity on Refinitiv’s Matching platform, the primary venue for sterling, were “very good” in the words of one, while other sources say good size tickets were going through both manual and via API. “Markets were orderly after the first jump,” says one e-trading source. “They were helped by a few profit takers soon after the exit poll, but even since then there has been steady buying but liquidity is holding up. Players were well prepared for this, so we shouldn’t be surprised – from here the only thing that will mess things up is if the exit poll is wrong, which would be unprecedented.”

Colin Lambert

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