Pound Quivers as Labour Closes Gap

Sterling Rises on Election Day

Sterling has started off slowly in December with the publication of several new polls showing that the Labour Party has made gains over the Conservatives. At the time of writing, the pound is at 1.1725 against the euro, and 1.2922 against the US dollar.

Several polling companies have released the latest voter intentions ahead of the 12th December election. Ten polls came out over the weekend, and nine of those interestingly have shown Labour increasing their share of the vote. Let’s have a look at a few of the most important polls.

Kantar has showed an increase of voting intentions for Labour by 5%, Ipsos MORI by 4%, and the infamous YouGov showed a more modest 2%. Five other pollsters reported that Boris Johnson’s party is losing support, but the highest loss was at 2%.

Are the Conservatives Still on Track for a Majority?

It may not look like good news for the Conservative Party on the face of it as Labour make gains, but their popularity is still wavering around the 40% mark. In theory, as long as the Conservatives are roughly 10 points ahead of Labour, this should be enough to secure a majority and settle the markets. Some of the polls have the parties neck and neck, others show the Conservatives with a comfortable 10 point lead. At around a 6-point lead, we’re entering into that unfortunate territory of a hung parliament.

It looks like Labour is making some of its gains from the Liberal Democrats, who have lost a couple of points according to the latest polls. Jo Swinson’s party hasn’t made the expected gains and appealed to the remain section of the electorate- they are the only party to pledge to revoke Article 50 and keep the UK in the EU.

Will Sterling Weaken over the Next Two Weeks?

When looking at polls and the outcome of the election, it is vital to remember that it is not the actual points or vote share which is important to the winner- it is the gap between seats for the two parties. This is down to the UK’s first-past-the-post electoral system, where the winner in the constituency has to get more voters than the candidate in second place.

If we look at trends, Labour is increasing its share of the vote at the expense of Jo Swinson’s Liberal Democrats. For the markets, a Conservative majority in Parliament is seen as probably the best outcome. This will result in Brexit certainty, as Boris Johnson should hopefully be able to pass his Brexit deal.

If you have an upcoming currency transfer and would like to learn more, you can contact me directly, Joseph Wright, on jxw@currencies.co.uk. I will endeavour to get back to you as soon as I can.