Sterling Interbank exchange rates hit an 8 month high last against the Euro last night, following the highly anticipated YouGov Poll results released at 10pm.
The YouGov MRP (Multilevel Regression and Post-stratification) poll is widely viewed as the most accurate, having correctly predicted the 2017 hung parliament, and the winning of swing seats by the Labour party in Canterbury, Kensington and Chelsea.
Results have shown Boris Johnson and the Conservatives to win by a majority of 68 seats in the 12th December election, which would bring the Conservative seats to 359 out of 650, which would be the best Conservative win since Margaret Thatcher’s victory in 1987.
However, although this poll is viewed by many as one of the most accurate, the election could still very much go in any direction. In an interview with Bloomberg TV, HSBC’s Head of Global FX Strategy David Bloom warned of the implications the upcoming election could have on the value of the Pound. Bloom said ‘nothing is currently priced in’ to the value of the Pound, and that providing any kind of forecasts in the current climate is very difficult with so many potential outcomes. When asked what the most damaging outcome for Sterling could be, he responded that a hung parliament could be a ‘disaster’, and a small Conservative majority could bring even more uncertainty.
Ursula von der Leyen, a close ally to German Chancellor Angela Merkel, has been announced as the first woman to take the role of European Commission President on 1st December and has promised a variety of major policy changes to try and tackle some of the EU’s biggest concerns including migration, climate change and improving economic growth across the bloc. She has also pledged to travel extensively to meet with European leaders to try and rebuild relationships and tackle the divide which currently stands between many of the 28 member states. Von der Leyen will also be responsible for negotiating with the UK on any future trade agreements should the UK leave the EU.
The US economy received a host of positive data releases yesterday afternoon, one of the most important being Gross Domestic Product for the third quarter which showed an improvement in economic growth from the previous and expected figure of 1.9%, rising to 2.1%. US citizens filing for the first time for unemployment benefits also fell last week to 213k compared to the previous 5-month high figure of 228k.
It was also noted that the US housing market has been improving in the fourth quarter, with its trade deficit falling sharply, all helping to remove concerns over the potential for a US recession in the short term. However, this improvement in economic growth is still a long way from the 3.1% seen in the first quarter of the year, largely attributed to the US China trade war and therefore lack of business investment and business confidence in the US.
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