The pound saw early gains on Thursday following Wednesday night’s YouGov MRP poll which suggested the Conservative party would win next month’s general election with 359 seats resulting in a healthy 68 seat majority.
The recently developed technique known as multilevel regression and post-stratification uses a computer model to look at voting on a constituency by constituency level and was the only poll during the run up to the 2017 election that successfully predicted a hung parliament.
With the Conservatives predicted to take a comfortable victory, financial markets felt reassured that more than 3 years of uncertainty following the 2016 referendum could finally be coming to an end and the pound approached 7-month highs.
However, as campaigning continued and data revealed subdued UK consumer confidence figures, the pound failed to hold on to its gains.
GBPUSD reached a high of 1.2950 in the morning, but slipped as the day progressed, touching a low of 1.2902 and then closing at 1.2908.
GBPEUR hit an early high of 1.1762 and then had a choppy run down to the low of day of 1.1723 as the session finished.
US dollar investors were cautious following US President Donald Trump’s decision to back pro-democracy protestors in Hong Kong. The response from China which said they would take “firm counter measures” and attempts to interfere with the Chinese ruled city were “doomed to fail” prompted traders to worry that situation would jeopardise the “phase one” trade negotiations.
As the US enjoyed the Thanksgiving public holiday yesterday, trading floors around rest of the world were waiting for any any more comments from China to suggest the trade talks would collapse, but in the absence of any further rhetoric, risk appetite returned later in the day.
EURUSD is the most heavily traded currency pair but with implied volatility now at the lowest ever on record and US trading floors closed yesterday trading was very thin. EURUSD traded in a super narrow range of just 15 pips between session high and low. The pair opened at 1.1008, rose to a high of 1.1018, dropped to a low of 1.1003 and closed at 1.1006.