The pound hit a six-month high against the euro on Monday after the Brexit Party said it would not compete in seats won by the Conservative Party in the 2017 general election. This has meant that in 317 seats the Conservatives have an easier path to victory and are much more likely to win a majority as a result. The pound reacts well to an increased likelihood of Boris Johnson’s withdrawal agreement taking effect in parliament.
The pound jumped as much as 1% against the dollar, finishing about 0.8% higher on the day. However, some analysts have said to remain cautious of a possible Labour victory and that a Conservative majority could see the pound rise a further 3% against the dollar.
GBPUSD opened at 1.2803 and jumped to a midday high of 1.2883, dropping only slightly in the afternoon to close at 1.2858
GBPEUR opened at 1.1609 and performed similarly, hitting a midday high of 1.1675 and closed at 1.1649
The US dollar was largely lower on Monday after President Donald Trump said trade talks with China were moving along “very nicely” but they would only reach a trade deal if it was right for America. The dollar index was last down 0.15% and the dollar was 0.15% weaker against the euro.
Analysts have expressed frustration at the progress of the trade talks, as they seem to jump from positions of optimism to conflict on an almost daily basis. The US dollar normally acts a safe haven in times of uncertainty though yesterday it was 0.21% weaker against the Japanese yen and 0.42% weaker against the Swiss franc.
EURUSD opened at 1.1029 and rose steadily across the day, closing at a high of 1.1038