With less than a week to go until the UK’s general election, it’s looking increasingly unlikely that Labour will close the popularity gap with PM Johnson’s Conservative party. Politico’s poll track has the Conservatives with 43% support, unchanged from Monday, and Labour with 33% support, also unchanged from Monday. The gap is seen as being beyond the margins of error in polling methodology, and sufficient to return Johnson as prime minister with a working majority.
GBPUSDhas settled today after running higher for most of this week as markets unwound the currency’s Brexit discount at a pace. Cable topped out at a 7-month high yesterday at 1.3166, while EURGBP printed a 31-month low.
The Pound in the BoE’s real trade-weighted measure remains 8% down on levels prevailing ahead of the vote to leave the EU in June 2016, but has rallied by just over 9% from the multi-decade low that was seen in mid August.
The outcome of next week’s general election is by no means a certainty. There is the possibility of opposition parties forming a coalition, or the Tories falling short of a majority and forming a coalition with the Liberal Democrats, which have stated that they would only support the party of PM Johnson on the proviso that there was a second referendum on EU membership. Also, if the Tories are returned to a Parliament with a working majority, the possibility of a no-deal Brexit would remain as they have pledged not to extend the Brexit transition period beyond the end of 2020, though many pundits, knowing Johnson, reckon that this is a ruse to win over as many ardent Brexit supporters from the Brexit party.
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Andria Pichidi
Market Analyst
HotForex
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