The pound remained high on Monday as markets have maintained their expectation that the Conservative Party will win the election on Thursday. The pound did dip a little later in the day after a poll showed their lead was narrowing to six points. The pound gained 0.2% against the dollar and was flat against the euro.
Investors believe that further sterling gains will be limited beyond the election as concerns will quickly switch back to economic data and whether the UK can negotiate a successful trade agreement with the EU. The election result will create what is being described as an “initial euphoria” but gains beyond this will be harder to achieve.
GBPUSD opened near a high of 1.3178 and fell to a low of 1.3145 across the day. A late afternoon recovery saw the pair close at 1.3158
GBPEUR opened at 1.1904 and followed a similar pattern, hitting a low of 1.1870 and closing at 1.1888
The dollar was steady against a basket of currencies on Monday as investors yet again were waiting for updates on the 17-month long US-China trade negotiations. The dollar index was down 0.04% and was 0.21% lower against its safe-haven rival the Swiss franc. The 15th December deadline for tariffs on Chinese exports negatively affected currencies exposed to trade disputes. The Australian dollar fell 0.1% and the New Zealand dollar fell 0.14%.
Beijing has said that it is keen to make a trade deal as soon as possible as talks are ongoing but the White House has said the tariffs are still due to take effect.
Investors have also turned their attention to the European Central Bank and the US Federal Reserve policy meetings this week, but both are expected to leave rates unchanged.
EURUSD opened at 1.1066 and reached an early afternoon high of 1.1077 before giving up all these gains in the afternoon to close shortly before reaching a low of 1.1057
