Election jitters continue to drive the Pound

Sterling has risen against both the Euro and US Dollar during European trading today, recovering early losses in Asian trading before UK markets opened. The Pound seems not to have been adversely affected by the horrendous attacks in London on Saturday, and continues to be driven by opinion polls ahead of this Thursday’s election. You can read my recent post here on the various outcomes of the election and the effect it might have on exchange rates.

Some polls still suggest that Theresa May will win with a larger majority, and if this is the case I think the Pound will rise on Friday morning when markets open. There are other polls however that show the result will be a hung parliament. If this is the case it means that on Friday morning, there will be no stable government formed, and it’s likely that the Pound will be sent crashing.

Whichever way the election goes, come Friday I expect the Pound to break out of its recent range where it has been sat at around €1.15 vs the Euro and $1.29 vs the US Dollar. My personal view is that May will win and rates will climb. Any gains however are likely to be short lived, as not long after the election is out of the way, Brexit negotiations begin and that’s likely to be Sterling negative. Those that need to buy Euros therefore that are happy to take the risk of waiting to see what Friday brings, may wish to fix a rate soon after the result.

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