GBP surged higher against all major currencies on Wednesday as the odds of the UK avoiding a hung Parliament at next week’s general election increased.
Having already moved over 1 cent this week, the pound raced to 7 month highs against the USD to 1.3116 and 2 year highs against the EUR to 1.1830. This is despite downbeat data released earlier in the day which showed UK services falling below expectations to read 49.3.
The appreciation in sterling was mainly due to a YouGov poll released on Tuesday, which showed the Labour Party lose further ground on the Conservative Party. Currently, the gap between the two parties stands at 9 points. Such a result in the election would see the Conservatives walk away with a comfortable majority and likely result in further GBP strength. This is due to an assumption by investors that a Conservative majority in Parliament will put to rest months of Brexit uncertainty and allow the PM to pass his withdrawal agreement.
10:00 – EUR: Retail Sales (YoY) (Oct) Expectation: 2.2% Previous: 3.1%.
10:00 – EUR: GDP (YoY) (Q3) Expectation: 1.2% Previous 1.2%.