The British Pound has done well in the run-up to the 2019 UK general election, climbing to 31-month highs against the Euro—breaking through the 1.19 interbank barrier—and seven-month highs versus the US Dollar—achieving levels of 1.31. Boris Johnson’s apparent lead in the opinion polls has been bolstering the British currency. Still, some analysts have suggested that any result which leads to a coalition could cause the Pound to soften. Meanwhile, a Labour Party win (an unlikely event according to recent polls) could create some Sterling losses, at least in the short-term, going against what the market is currently expecting, and with the prospect of fresh negotiations ahead.
Update 11.12.19 - The Pound has stumbled overnight versus the US Dollar following polling data which showed Thursday's general election could be much tighter than previous polls have suggested. A YouGov poll showed that a Conservative majority could be won by just 28 seats--a stark comparison to a November poll by YouGov which showed a Conservative majority of 68 seats. The Pound has strengthened by around 8.0% since October against the US Dollar, and around 7.5% versus the Euro.
The Financial Times has created a poll tracker, to show a collection of recent data.
The latest poll conducted by ICM on December 9th used a sample of 2011 and showed the Conservatives with 42 points and Labour with 36. A bigger survey by ComRes conducted on December 8th with a sample of 6073 came to a similar conclusion, putting the Conservatives slightly further ahead with 43 points, and Labour with 36.
Betfair forecasts for most seats:
Conservative Party - 1/33
Labour Party – 14/1
Liberal Democrats – 300/1
Brexit Party – 500/1
Green Party – 500/1
Betfair forecasts for overall majority:
Conservative majority – 3/10
No overall majority – 3/1
Labour majority – 25/1
Liberal Democrat majority – 500/1
Green majority – 500/1
(Betfair data correct as of 10.12.19)
The party policies are largely about Brexit, and we’re very briefly outlining some of the main party promises to highlight what each is intending to do should they gain power.
While the Conservatives are hoping to end the transition period at the end of 2020, some have been concerned that the risk of a no-deal could rise again, with the party not entertaining an extension—something that could cause the Pound to be volatile in the year ahead. Should the Conservative plan unfold with the clock ticking to get a deal done, Brexit volatility or economic disruptions could give the Bank of England reasonable cause to cut interest rates next year, which could also create Sterling softness. Meanwhile, if the polls are incorrect as some have been in the past, or there's no clear winner, December could see some significant Sterling movement.
If you need to move money abroad for a business or personal transfer, you can speak to a member of our Dealing team, on 020 3465 8200 for corporate money transfers, or 020 7989 0000 for personal payments. In anticipation of market volatility, we're extending our opening hours on the 12th and 13th of December, to help our clients make transfers when they need to.