The weakness of the pound was a feature of the past three years, running at around 18% below the pre-referendum level. That was a bonus for anyone buying in the UK from abroad and significant extra cost for Brits buying abroad. Much has changed in the past few weeks, with the pound reaching its highest rate for two and a half years. But where next? The General Election result in the early hours of Friday 13 December could shift the dials considerably – but which way?
The pound is continuing to move along at around its highest rate against the euro for the past three years. Indeed it’s rarely been above this rate consistently since just after the Brexit vote. But will it go higher? A Conservative victory hasn’t yet been priced into the value of the pound, and the the latest polls show that the Conservative rise has leveled off. Meanwhile, Labour’s stock is still rising, but at around 10 points behind you do wonder where it might get those extra votes from in the next few days.
Could they come from bored Conservative voters staying at home? Boris Johnson said last week he was worried that Conservative voters were losing focus and forgetting what the election is really all about – Brexit. The Liberal Democrats and the Brexit Party, whose poll ratings continue to fall, would probably say the same.
So could Labour’s campaign promises be starting to cut through? This week they promised a third off rail fares, last week an average payout of over £15,000 to women born between 1955 and 1960 who lost out in pension reforms… It’s certainly a lot of money promised to a lot of people. Meanwhile, the Conservatives are promising tax cuts in a budget in February, and lower taxes have always tempted Conservative voters in election after election.
So it will be an interesting few days. There are also other potential factors, such as the weather in mid-December, that could bowl a googly.
We are extending our opening hours to 8am to 8pm on Thursday 12 December and from 6am to 7pm on the results day, Friday 13 December.
But why not call your trader before then on 020 7898 0541 and lock in today’s rate via a forward contract.
Please note our warnings on these predictions. These are the market expectations of how sterling will react to different General Election outcomes. Experience over the last 15 years has highlighted that forecasting currency movements is a fool’s errand and using expectations is very dangerous when managing your currency risk.