The pound recovered slightly on Wednesday as it had suffered losses due to polls showing the Conservative lead narrowing in the final two weeks before the election. The pound fell as much as 0.3% against the dollar but then recovered to end the day up 0.1%. It also finished 0.25% higher against the euro.
However, last night a closely watched poll by YouGov which uses far more rigorous polling criteria showed that the Conservatives are due to win a majority of 68 seats. This poll was the only one to correctly predict the 2017 elections hung parliament outcome. This has caused the pound to strengthen further this morning. Analysts have said that the there will be a limit to the gains the pound can make beyond the election even with a Conservative majority. Leaving the EU on the 31st of January still leaves 11 months to negotiate a trade deal with the EU or risk leaving with no deal.
GBPUSD opened at 1.2843 and climbed steadily all day, closing at a high of 1.2884. Last nights polling caused it to reach a late evening high of 1.2948
GBPEUR opened at 1.1667 and performed almost identically. Closing at a high of 1.1711 and reaching a late night high of 1.1765
The dollar made gains against several currencies on Wednesday as US data came in stronger than expected, overshadowing uncertainty around the ongoing trade negotiations. The dollar index gained 0.15% against six major currencies.
Personal consumption expenditures were up 0.1%, indicating that interest rates are unlikely to be raised for the foreseeable future. The US and China remain “close” to achieving a “phase one” agreement however investors remain sceptical that this will lead to a tangible deal.
The Japanese yen has stumbled as risk appetite has increased, with the dollar gaining 0.47%.
EURUSD opened at 1.1009 and slipped steadily to an afternoon low of 1.0994, recovering to close shortly after at 1.1002