Dec 10, 2019

British pound stalls ahead of U.K. election

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Data: Investing.com; Chart: Axios Visuals

Since falling to its weakest level in more than three decades against the dollar on Sept. 3, the British pound has been on a tear. It has risen by nearly 10% to its strongest level against the dollar since May and its highest against the euro since May 2017.

What's happening: Currency traders are shaking off fears of a no-deal Brexit. Polling ahead of Thursday's election shows the Conservatives in the lead and they are expected to gather behind Prime Minister Boris Johnson's Brexit plan.

Yes, but: As the election draws near, traders have lost their nerve and the currency has been little moved since closing above $1.31 on Dec. 4.

  • “Nothing is priced in,” David Bloom, global head of foreign-exchange strategy at HSBC, told Bloomberg in November. “The political outcome will determine the future of the currency.”
  • Bloom projects that if Britain can negotiate an orderly exit from the EU, the pound could rise to $1.45 by the end of next year. But, a no-deal Brexit could see it tumble to $1.10.

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U.K. election: Key poll shows shrinking lead for Boris Johnson

Photo: Christopher Furlong/Getty Images

U.K. Prime Minister Boris Johnson's Conservative Party is projected to win a majority of 28 seats in Thursday's high-stakes election, down from a 68-seat majority forecast by the same poll in late November.

Why it matters: YouGov's MRP poll of 100,000 voters was the only one to accurately predict that Theresa May would lose her majority in the shock 2017 election. With just two days left in what's been a brutal election campaign, the opposition Labour and Liberal Democrat parties will be doing everything they can to block Johnson from earning a majority and passing his Brexit deal through Parliament.

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