Pound rises as polls put Tories in election driving seat
Sterling was rising against the dollar and euro on Monday, after a series of polls over the weekend gave Boris Johnson’s Conservative party a commanding lead ahead of the 12 December general election.
The pound was up 0.3% against the euro to €1.1709 (GBPEUR=X) at 8.50am UK time, marking a 6-month high.
At the same time, sterling was up 0.3% against the dollar to $1.2951 (GBPUSD=X), a two-and-a-half week high for the pairing.
The rally came after several polls in the weekend press pointed to a likely Tory majority after the upcoming election.
Polls in the Sunday Times and the Mail on Sunday put the Conservatives on 45% of the vote, with the opposition Labour Party trailing behind with between 28-30%.
A separate Opinium poll put the Tories on 44% and Labour on 28%, while a Sunday Telegraph poll had the Tories with an 8-point lead.
“An election victory for the Conservative party seems to have been largely priced in, the odds of achieving a substantial majority are rising,” said Marc-Andre Fongern, a currency analyst at MAF Global Forex. “Hence, the GBP's solid performance in recent weeks is a logical consequence.”
A Conservative victory is seen as good news for sterling as it would likely allow the government to move on to the next stage of Brexit negotiations, moving the country closer to a resolution of the issue.
Boris Johnson’s Brexit deal was approved in principle by parliament last month — the first deal to get any form of approval in the House of Commons. Johnson said over the weekend that all Tory candidates have signed up to support his deal, suggesting it would be passed into law if he wins a majority.
Connor Campbell, a financial analyst at trading platform SpreadEx, said investors were “reading a Conservative majority as the best outcome thanks to the relative clarity of where it leaves Brexit.”
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