Sterling has had one of its strongest days for several years, climbing almost 3% versus the dollar following the release of an exit poll from the UK general election signalling a large majority for the ruling Conservative Party. Cable jumped to 1.3330 from 1.3170 on the release of the poll, before climbing higher to 1.3510, […]
Tag: UK election
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 […]
I am flying to Singapore and then Hong Kong for our two Asian conferences this week, so this will necessarily be relatively brief – what does the British electorate have in store for us this time and will this UK general election, like so many other votes recently, leave the pollsters with egg on their […]
With December in financial markets only livened by the shenanigans of bitcoin, including the launch of futures trading (complete with trading halts), it is time to unveil the next Irrational. It’s a favourite of mine, Analysis of the Year, and boy is this one competitive!
The easy option would be to pick out a few predictions that went horribly wrong and highlight them, but that would be unfair as we all get it wrong from time to time, just look at my Trade of the Year record in the Profit & Loss Crystal Ball!
It felt like a traditional FX market on Friday in Asia as the industry coped easily with another geo-political surprise stemming from that most subversive of groups – the UK electorate. Speaking to people in the market there were, apparently, good bids all the way down in Cable from resting interest and manual traders were heavily involved in both that and the crosses.
This made me wonder whether the surge in interest in manual traders can be correlated with orderly market functioning?
After an initial 1.7% drop when the exit poll was released in the UK predicting a surprise hung parliament after the UK general election, FX markets have stabilised with Cable ranging around 1.2750 and EUR/GBP around 0.8780.
Market sources say volumes have dropped from the earlier high levels as uncertainty over the outcome reigned, however the market appears to have come to terms with a minority government. BBC predicts the Conservatives will win 318 seats, with Labour in second place on 262 and analysts at the broadcaster say there is “no way” that a hung parliament can be avoided.
FX markets have settled with sterling some 1.5% lower after the shock exit poll indicated a hung parliament and analysts are saying that further losses could be possible.
“It’s not looking good for Theresa May, who appears to have lost the Conservative’s majority in Parliament,” writes Kathleen Brooks, director at City Index. She adds, however, that in 2015 the exit poll also suggested that the Tories wouldn’t win an overall majority, but they won with a slim majority, “so there is a chance that Theresa May could still hang onto Number 10”.
Sterling has dropped sharply in early Asian trading as exit polls from the UK election indicates the ruling Conservative government will win the most seats but will fall short of a majority.
An exit poll for BBC News, ITN News and Sky News indicates the Conservatives wining 314 seats, Labour 266, Scottish National Party 34, Liberal Democrats 14 and local parties (including the Greens) winning 22.
Cable has fallen from 1.2950 to 1.2710, EUR/GBP rose strongly to 0.8820 from 0.8657 and GBP/JPY fell from 142.50 to 139.75. Cable has bounced to 1.2760 and EUR/GBP is back below 0.8800,
The outcome of the UK General Election has become less certain as the campaign has progressed, posing questions around the impact of an unexpected result. Some investors are speculating about how this will affect the pound and, of course, Brexit negotiations. Michael Gowland, global head of treasury at Earthport FX, provides an outline of some of the possible scenarios.
Scenario 1: Conservative win
The market has largely priced in this outcome and therefore, we expect this result to have a neutral to slightly negative impact on sterling going forward. The Conservative pledge of a “balanced budget by 2025”, which roughly translates as tighter fiscal policy, may have a medium-term impact on sterling, although the current upward trend we see on technical charts should not be discounted – and at this stage, we would refrain from being overly negative.
Sterling dropped around 80 points as the market was spooked by news that UK Prime Minister Teresa May was to make a major announcement imminently, Cable falling to 1.2515 from1.2585 in a matter of minutes.
Prime Minister May has surprised by calling a snap general election for June 8 in the UK, however as the announcement was made Cable rebounded strongly to the 1.2575-80 level. Market sources say the initial dip was driven by rumours that May was going to announce her resignation, however the reality of an election has apparently been taken by investors as a sign the UK may have changed tack on Brexit and prompted the rebound.