Sterling hits 31 month-high against the Euro
The Conservatives have won their biggest majority at Westminster since Margaret Thatchers 1987 election victory. Labour, which has lost seats across the North, Midlands and Wales in places which backed Brexit in 2016, is facing its worst defeat since 1935; while Jo Swinson has quit as Liberal Democrat leader after losing her seat to the SNP. At the time of writing the Tories have a majority of 76 with just two seats left to declare.
Jeremy Corbyn has said he will not fight another election as Labour leader after the party was swept aside in its traditional heartlands.
The Pound is now embarking on a sizeable rally that sees it start to regain its losses from the 2016 EU referendum. The Pound surged through the 1.20 barrier against the Euro and 1.34 against the Dollar after the exit poll last night, with rates just holding on to these levels this morning. We could see the rates tick even higher once the US markets open in the afternoon.
So why did the pound react positively to the Conservative majority?
The Pound remains an effective gauge for expectations of the performance of the UK economy. The markets understanding of the election result is that the UK economic growth is likely to pick up and as a result we could see an interest rate rise at the Bank of England. Now, with a Conservative majority this should guarantee an orderly Brexit on 31st January 2020.
Now that the election is out of the way all eyes will be back on any Brexit developments. If you have an upcoming transfer get in touch on the details below to chat through your options with an expert broker at Optimal Currency.