GBP/USD Exchange Rate Surges as Poll Points to Large Tory Majority
The Pound US Dollar (GBP/USD) exchange rate is consolidating its gains this morning, after roaring higher overnight as a highly influential opinion poll suggested Boris Johnson is on track to win big in next month’s general election.
At the time of writing the GBP/USD exchange rate is trading at around $1.2930, virtually unchanged from today’s starting levels but up from $1.2850 on Wednesday.
Pound (GBP) Set to Surge if Conservatives Win Big Next Month?
The Pound (GBP) has skyrocketed this week, spurred higher by a crucial poll which indicates the Conservatives are likely to secure a convincing majority on 12th December.
YouGov published its multilevel regression and post-stratification (MRP) poll overnight on Wednesday, which predicted the Tories will win a majority of 68 seats, the party’s biggest win since 1983.
The MRP poll is highly regarded by analysts as it uses a model that attempts to work out which party will win in each constituency. It was also the first poll to correctly predict that Theresa May would lose her majority in the election 2017.
It’s hoped that in securing a majority Boris Johnson will be able to push his Brexit deal through parliament, providing markets with more clarity on the whole process and giving a short-term boost to the Pound.
However with two weeks still to go before UK voters go to the polls, there is still everything to play for.
Should Labour defy the odds and manage to narrow the gap enough to prevent a Tory majority then it’s likely we could see Sterling meet by some significant volatility next month.
US Dollar (USD) Supported by Safe-Haven Demand
Despite the closure of US markets for the Thanksgiving holiday creating some thin trading conditions for the US Dollar (USD) today, the currency remains well supported thanks to market risk aversion.
This comes is response to renewed tensions between the US and China after President Donald Trump signed into law a bill aimed at protecting the rights of protestors in Hong Kong.
Beijing responded with anger to the signing of the bill, and warned of ‘firm counter-measures’ if the US continues to support pro-democracy protestors in the city.
The news has cast doubts over the possibility of the US and China finalising a preliminary trade deal by the end of 2019, prompting a risk-off mood in markets which has benefited the safe-haven US Dollar.