Election week is heating up. How will it effect the currency market? (Daniel Johnson)

Labor only 4 points behind the Tories

Labor are now very close in the polls to the conservatives. The latest YouGov poll has a gap of just four points. Historically, during an election the currency in question weakens. As a rule, the more uncertain the outcome, the weaker the currency. The conservatives are deemed as a safer bet for the UK economy than Labor. When the snap election was called we saw Sterling strengthen against the majority of major currencies due the significant lead in the polls. This gap has been cut which is why we have seen the pound drop in value.

If the conservatives gain a majority victory I would expect to see Sterling strengthen. If there is not a majority victory expect further falls for the pound. A hung parliament I would expect to see further falls for the pound. Despite many parties stating they are not willing to form a coalition with particular opposition,I’m sure they will soon change their tunes when they see the opportunity for power. As demonstrated by the Lib Dems in 2010.

If there is a coalition this could cause problems for the pound, parties combined with differing manifestos means getting anything through parliament will be problematic, but the major concern is how this will effect brexit trade negotiations. Potentially, Labor could form a coalition with more than one other party which could be considered worst case scenario for negotiations. I would not expect a pound  recovery in the event of this outcome.

If you have a currency requirement it is absolutely crucial to be in touch with an experienced broker who has traded through similar periods of volatility. We have contract options available that can put you in a position to trade even if your funds are not available, this should definitely be considered for those who are waiting on their Euros to released from other assets. This could be a small window of opportunity.

If you let me know the details of your trade I will endeavor to get back to you within 24hrs with a free, trading strategy to suit your individual needs. If you already have a currency provider I will be happy to perform a comparison and I am very confident I will be able to demonstrate a considerable saving. I can be contacted at dcj@currencies.co.uk. I look forward to being of help.

 

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