UK Election 2019
Its the final day of campaigning for UK General Election 2019 and tomorrow is election day. Some last-minute drama has been injected by the latest YouGov poll — using its famed MRP methodology (massive survey size and deep analysis to take in account of local factors), which correctly called 93% of seats in the 2017 election — showing that a Conservative majority of 28 seats is likely, down from the 68 seats the same survey predicted two weeks ago. The result is significant as it suggests that the possibility of the Conservatives falling short of a majority is within statistical margins of error.
Seasoned political pundits in the UK have been warning about unpredictability in this election, despite polling showing a consistent 10-point odd lead for the Conservatives, due to the relatively large degree of undecided voters, most of which were people who had voted for Labour in the 2017 election, along with the pro-EU campaign to encourage tactical voting. For sure, a Conservative-with-majority remains the most likely scenario.
Survation, a conventional pollster which was closest to the result in 2017, is showing a 14-point Conservative lead, while Politico’s poll tracker has the Conservatives at 43% support, unchanged since Monday last week, and Labour with 34% support, up a point from yesterday. One thing that stands in the YouGov MRP poll is that it shows the Brexit Party failing to win a single seat. That is significant as it would mean that a no-deal Brexit would be off the table, as the party wouldn’t be in any position to hold the Conservative Party’s feet to the fire over the next election cycle (5 years).
The assumption here is that Johnson’s past rhetoric about a no-deal-Brexit-if-necessary was essentially a bluff. If the Conservatives are forced to form a minority or coalition government, they would have to look to either Northern Ireland’s DUP (again – but the relationship has soured significantly) or the Liberal Democrats (would they really get into bed with Johnson following the disaster for the Lib-Dems of the Cameron-Clegg coalition?). The DUP would insist on re-doing the Brexit deal (back to square one), while the Liberal Democrats would insist on there being a second referendum. If there is a shock Labour victory, or Labour-led minority or coalition government, then a soft Brexit deal would be proposed and then be put to a confirmatory referendum.
ING Economics have various scenarios for Sterling shown above. Cable is currently pivoting at 1.3150 whilst EURGBP holds north of today’s pivot at 0.8420.
Join me on Friday morning at 09:00 GMT on our Facebook page to discuss the aftermath of the UK Election and the impact for Sterling, UK Bonds and the UK100.
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Stuart Cowell
Head Market Analyst
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