The pound made slight gains on Wednesday despite polls indicating that the Conservative lead had narrowed the day before the election. The pound was up 0.2%, not far from its eight-month high that it hit on Tuesday. A closely watched YouGov poll put the Conservatives on course to win a 28-seat majority, down from 68 in the previous forecast. A hung parliament remains within the margin of error.
This did not deter investors betting on a majority. Odds for a hung parliament were around 29% and the odds of a Conservative majority were at 69%. The UK heads to the polls today with the exit predictions expected as soon as polls close at 10pm. The pound has fallen amid increased uncertainty about the result. Traders have started protecting their exposure in case of a surprise election result.
GBPUSD opened at 1.3116 and climbed across the day, closing near a high at 1.3176 and hitting 1.3208 in the late evening. This morning it has reached a low of 1.3156
GBPEUR opened at 1.1834 and followed a similar pattern, closing near a high of 1.1880. This morning the pair reach a low of 1.1822
The dollar fell on Wednesday against a basket of currencies as the Federal Reserve left rates unchanged. Chairman Jerome Powell indicated that a rise in rates would need to be cause by more sustained inflation. The dollar index that measure the greenback against six major currencies was down 0.33%. It looks as if US tariffs on Chinese goods may be delayed as officials in Washington have begun preparing for this. A confirmed delay will cause a boost in global currencies.
The euro was 0.4% higher against the dollar as investors awaited today’s first ECB policy meeting with new head Christine Lagarde. Elsewhere the Swedish crown made gains on the back of strong inflation data.
EURUSD opened at 1.1084 and made losses across the morning, hitting a low of 1.1073 before jumping sharply in the afternoon to close at 1.1093 and continue to hit an evening high of 1.1143
IFX will be open for trading between 9:30pm and 2am this evening. Over the last decade, the election exit polls released at 10pm have been reasonably accurate indicators of the final result.