An increase in the likelihood of a Conservative win has caused pound sterling to skyrocket against the euro, dollar and other major currencies as the markets opened for trading on Wednesday 4 December.
On Wednesday, the Betfair Exchange´s general election section was updated to show the odds for a Conservative´s majority at 70% after sitting at 66% just 24 hours before. As the odds for this outcome increased, so did the sterling exchange rate.
The pound was up 0.3 per cent against the dollar to $1.304 and up by 0.3 per cent against the euro to €1.1766 simultaneously, its highest level since March.
Michael Hewson, chief market analyst at trading platform CMC Markets, identified a Kantra poll reported by The Sun that indicated Boris Johnson was ahead of competitor, Jeremy Corbyn, by 12 points.
Another poll carried out by Sky News and YouGov on Tuesday night revealed a Conservative lead of 9-points, while the superior Britain Elects poll currently shows a 10-point lead for the Prime Minister´s party.
In recent weeks, opinion polls have pointed to a Tory win which has allowed the pound to regain some of its strength against other currency. Sterling experienced a minor blip this week a bleak outlook from experts regarding the manufacturing industry was announced.
The strength of the dollar dwindled on Tuesday after President Donald Trump signalled that a trade deal with China could be postponed until after the US elections in November 2020. This weakness is assisting the boost in British currency.
Neil Wilson, chief market analyst at Markets.com said: “Dollar weakness since the end of November has been very marked and key to this pound move,” Wilson said in an email. “Bulls pushed the 1.30 door ajar yesterday, kicked it down this morning.”
US stock markets had previously been trading at record levels, however, the FTSE 100 closed at 1.8 per cent lower on Tuesday while the pound hit €1.30 for the first time since October.
The pound gained further ground on Wednesday to hit levels not seen for seven months – $1.3063 – as further dollar weakness took hold.