The British Pound rose against the Euro on Monday after BMG and Survation polls confirmed expectations of a Tory win in the general elections on 12 December. Both polls showed that the Conservative Party was leading the polls, with Labour suffering losses.
The Independent’s BMG poll showed the Conservatives gaining points to 41% and Labour losing 1 point to 32%. ITV's Good Morning Britain Survation poll showed the Conservatives gaining 2 points to 45% and Labour losing 2 points to 31%. Leading by 7 points means that the Tories will win with a majority, while a 14-point lead shows a clear-cut win.
With a Tory majority clearly confirmed by the polls, and fears of a hung parliament receding, the pound rose to a 31-month high against the euro, while against the dollar, the pound was a little bit less than last week’s 7-month highs.
The Survation poll was conducted between 5 and 7 December by telephone with 1,012 respondents. The positive news for the pound is also that Labour is losing rather than gaining points, showing that there is a healthy gap between the two parties and that that gap would be impossible to close in the next three days. Richard Pace, options analyst with Thomson Reuters, said that "Polls continue to show the Conservatives on course for a majority government after Thursday's UK election, which would end the Brexit uncertainty and prove the most favourable outcome for GBP." It appears that a Tory majority is almost now certain, but many traders are waiting to see as the high number of undecided voters could affect the election outcome.
According to Elsa Lignos of Royal Bank of Canada, undecided voters could really change the election outcome. As she said: “There are two main possible outcomes for this week’s election which will shape the UK for possibly decades to come: (1) A Conservative majority government (exit from the EU at end-Jan on terms of Withdrawal Agreement and then still TBD, the free trade agreement that has to be negotiated by the end of the transition period); (2) A hung Parliament that would see a further delay to the UK’s EU exit and potentially a second referendum. Bookies odds show a Tory majority as a near certainty, in line with the steady gap in most (but not all) opinion polls. But there is a historically high number of undecided voters which could affect as many as 80 marginal seats. We will be neutral GBP going into Thursday and look to trade the outcome.”
The Telegraph reported that Boris Johnson will visit on Monday Leave-supporting constituencies in England and Wales to urge them to reject Jeremy Corbyn’s “great betrayal” of Brexit and Labour politicians “who sneer at your values and ignore your votes.” He is expected to tell voters in Sunderland later on Monday that "The Labour party has let you down," while Parliament has "bent every rule and broken every convention as it has delayed, diluted and denied Brexit.” Johnson’s message will be that a vote for his party is a vote to "get Brexit done and unleash Britain's potential.”
On the other hand, Labour, will turn towards the economy by highlighting their radical programme of nationalising utilities and the Royal Mail, as well as investing in public services, and creating new rules for businesses and homeowners in the first 100 days of a Corbyn administration.
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