Johnson’s Tories dominate election
Friday 13 December, 2019
Daily Currency UpdateGBP - British PoundAfter weeks of campaigning, Johnson’s Tory party dominated the election to win a majority of 78 seats. Many described the vote as a ‘presidential style election’ as it seemed a two horse race from the offset and throughout. Having said that, Labour’s support is about 8% down from their 2017 election effort and it was most certainly a better night for the smaller parties. Cable opened at 1.32 on Thursday morning during the UK trading session and consistently retraced to lows of 1.3050 on Thursday as rumours/market scare weighed on the pound. Once the exit poll was released however, it was Christmas come early for the British currency as it surged through the 1.33 and 1.34 handles like a warm knife through butter. Sterling topped out at 1.3515 against the U.S. Dollar and 1.2080 against the Euro. As expected, Sterling re-positioned as it found market equilibrium and is now trading around the 1.3450 handle against the USD.In the short term, GBP should have a fairly calm trading pattern through to the New Year. Despite further clarity around the UK domestic political system, we are still yet to solve the ever present Brexit issue. Johnson’s ‘oven ready’ Brexit solution was consistently mentioned throughout his campaign and it seems the obstacles between he and the light at the end of the Brexit tunnel are becoming few and far between.
Key MoversAcross the pond, there is a wave of optimism around the US-China trade war and a potential resolution. It seems the US have presented Chinese officials with a deal they consider fair and as of yet, they are yet to accept. Having said this, US risk assets have risen off the back of some positive comments from Washington. In other news, trump threw in his two cents on the UK election result. He tweeted Johnson, congratulating him for his ‘great WIN’. He went on to discuss the future of the UK-US trade and claimed that the two nations have the potential to strike a deal ‘far bigger and more lucrative than any deal that could be made with the EU.’In Europe, Lagarde gave her economic forecast for the Eurozone going forward however didn’t say a lot. She claimed the economic cloud currently overshadowing the Eurozone has been lifted, which may be a response to the better-than-expected German ZEW Economic Sentiment release last week.
- GBP/USD: 1.3350 - 1.3515 ▲
- GBP/EUR: 1.1945 - 1.2105 ▲
- GBP/AUD: 1.9325 - 1.9490 ▲