Well, it’s finally here, the day everyone has been waiting for- election day! Sterling had a solid start on this chilly election day, coming in against the euro at 1.1860 (up 0.06%) and at 1.3210 against the dollar (up 0.09%) at the time of writing. The British pound could rise sharply if there is a well-sized Conservative majority revealed tomorrow, but a hung parliament could cause it to drop.
Closer than Close
The final polls released last night suggested that the result will be incredibly close- within the margin of error both for there to be a decent Conservative majority and a hung parliament. Sterling is reflecting confidence in the market of the former, despite one poll from Comres last night which showed the Tories had a 5 point lead over Labour- considerably lower than previous polls.
According to Comres, Labour have increased their popularity by 3 points, taking them up to a 36% share of the vote. This leaves the Conservatives unchanged at 41%. For a party to get a comfortable majority, there needs to be a difference of roughly 10 points between the top two. If this result comes to fruition, we could see the markets open low on Friday.
Whilst the Comres poll will be worrying for some, it was not the only poll out there yesterday and was the only one which had the Tories on such a small lead. Politico put together a poll of polls, which showed that with all polls combined, the Conservatives would have 43% of the vote, and Labour on 34%. The 9-point difference should be enough for the Conservatives to win a majority.
When Will We Know Whose Won?
Betting markets today have given odds of 73% for a Conservative majority, up 5% from Wednesday’s odds.
Over the next 24 hours, there will be several key times:
• 10pm- Polls close, and the exit poll will be announced, which is used to predict the amount of seats won by a party.
• 11pm- First results come in about an hour after the polls close.
• Early morning on 13th December- Once a party wins 326 constituencies (just over half available seats), then it will be clear who has won. However, if there’s a hung parliament, this might not be clear until later during the day.
The next 24 hours are crucial to the UK’s next five years of Brexit and economic policy and will set the tone for the direction of sterling.
For more GBP/EUR news or if you have a currency requirement you can get in touch with me, Tom Holian, directly at email@example.com, or call +44 (0) 1494 360 899 to discuss these factors in more detail.