Pound soars to highest rate in over a year with Conservative majority win
The pound has soared to a new 19-month high as the Conservatives won yesterday’s UK general election.
The Tories have won an overall majority in the December 12 election, and sterling has gone up to $1.35 - a 2.1 per cent increase and the highest it has been since May 2018.
This is due to a huge majority win potentially removing uncertainty surrounding Brexit. The pound has also jumped to the biggest high seen in over three years against the euro.
The UK is set to leave the EU next month, on January 31, according to Prime Minister Boris Johnson.
Emma Wall, head of investment analyst at Hargreaves Lansdown, commented on the results: “While the polls - and indeed the markets - were prepared for a Conservative win, it certainly wasn’t of this magnitude.
“Sterling bounced on the news of the exit polls, and while moving from $1.32 to $1.35 might not sound like much, in currency world that’s big news.”
She added: “The FTSE should open flat - but with plenty of rotation underneath the hood. The currency bounce will suppress the blue chip index, which has mostly overseas earnings, but improved sentiment will balance out that headwind.
“Investors who were brave enough to go long domestic equities - and in particular anything under nationalisation target from Labour, such as utilities and transport - should be rewarded.
“While there will be enticing currency and market moves over the next hours and days, it is still very early days for the new government. Investors looking to play politics should be wary. Even the professionals get these kind of macro market calls wrong.”
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