Pound buoyant as polls predict a Tory majority
Sterling has pushed back towards the top end of its range this afternoon as opinion polls continue to show the Tories as favourites for the 12th December general election.
Boris Johnson’s party manifesto hasn’t rocked the boat with there being no ground-shattering promises or blunders. He’s vowed to deliver Brexit without any further delays, a modest boost to public spending, and no new taxes. Some polls now predict a Tory majority of nearly 50 MPs and bookies have reduced their odds of a hung parliament. This has bolstered the Pound as investors prefer certainty (over Brexit/politics) and the market-friendly policies of the centre-right.
In other news, US-China trade talks appear to be more encouraging. China has announced that they will be much stricter on intellectual property rules, which has been a major concern for the US, and President Trump has refrained from signing a bill to support the pro-democracy protesters in Hong Kong. This, along with other optimistic comments, has boosted risk sentiment.
As a result, the GBP/EUR and GBP/USD are both up around 1-cent from last week. Sterling is now trading towards the top of its range and a lot of the expectations surrounding a Tory victory have been priced into Sterling so further gains might be limited (for now). We might therefore remain relatively range-bound for the foreseeable but there could be some more volatility as we get closer to the December poll.