After a solid day of gains for sterling there were further gains late last night, when the release of an eagerly anticipated election poll pointed to a sizeable majority for the Conservatives. While there are many opinion polls released on the election, the MRP release garnered the most attention due to the results being broken down into individual seats rather than a simple popular opinion.
The results of the YouGov/Times MRP poll was as follows, shown in the format of seats (change):
GBP/EUR rate rises close to 7-month high
This would give the Conservatives a majority of 68, with the bulk of the gains coming at the expense of the main opposition party, Labour. There are obvious caveats which should be mentioned with this result, such as that it was conducted before the recent slight narrowing of the Tory lead in other polls and that 30 of the Conservative seats are predicted have a winning margin of less than 5%. However, it’s quite clear that they are in a commanding position at present and it would take a fairly dramatic swing to see them fail to pick-up a majority.
The relative reduction in uncertainty under a Conservative government is seen as greater than that under other possible outcomes and therefore this latest development has seen further gains in sterling, with the pound moving up to its highest level against the Euro in just under 7 months in response.
Stocks dip as Trump signs HK bill
There was a little hit to risk sentiment overnight as Donald Trump finally signed the Hong Kong bill which features sanctions against officials deemed responsible for human rights abuses. Given the precarious nature of US-Chinese relations at the moment and a widespread hope amongst investors that a phase one trade deal will be signed shortly, this move has caused a little concern with equities pulling back after recent and bond yields falling.
With the US celebrating Thanksgiving stock markets in New York are closed for the day and there’s a good chance we get a fairly slow day’s trade in other asset classes as many traders take the day off.