There seems to some considerable debate about just what will happen to the GBP vs EUR and USD should various General Election scenarios come to pass. Forecasting does often have its outliers but there can be, very generally, some consensus viewed in learning of institutional banking predictions for currency crosses. This doesn’t appear to be the case currently with the upcoming election splitting opinions about whether or not the rise in the strength of the Pound usually expected from a Tory majority is currently priced in to the markets or whether or not this would invite a significant increase in the Pound’s value. Predictions available from major forecasters appear to be lumped either around current levels, in the event of a Johnson win, or lumped around a figure 5-7% above the plateau we have traded at of late. So then, no consensus and the opportunity cost of incorrect predictions could be a very, very large move….
The markets yesterday were abuzz with the news of the Pound breaking the 1.3000 figure on the news of the Conservative Party widening their lead to 12 points (versus the previous polling result of 11) over Labour. The actual voting figures now sit (in polls) at 44% for Tories and 32% for Labour. It could be said that Trump’s attendance in the UK may have ruffled the election process somewhat and there were some observers watching for the relationship between Trump and Johnson and the dreaded NHS conversation, but this (for now) looks as if it is an overstated risk as things ran smoothly since his arrival. Trump has verbally committed to stay out of the election altogether.
Trump’s visit is interesting from the perspective of his being an exponent of redefining trade terms and relationships and foregoing pleasantries in lieu of more forceful articulation of his desired ends. It is then no surprise that he is a supporter of Brexit, and the verbiage used in picking up a trade relationship with the UK may actually be worth watching closely – given he has been almost damning of his two main trade partners, China and the EU. Adding to this, the rhetoric concerning the NHS has actually taken a U-turn, Trump now saying that he wants nothing to do with the NHS and wouldn’t consider any part of it.
Rates at time of writing:
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