Pound, bookies react to poll projecting Conservative election win

By Ritvik Carvalho

LONDON (Reuters) – The chances of a Conservative Party majority after next month’s UK election hit their highest of the campaign on Thursday and lifted sterling in tandem after a closely watched polling model indicated the party could win its biggest majority since 1987.

Such a majority, estimated at 68 seats under the model developed by pollsters YouGov, would give Prime Minister Boris Johnson a mandate to take Britain out of the European Union on Jan. 31 with a divorce deal already negotiated with Brussels.

As the following graphic shows, odds on a Conservative majority on Betfair Exchange hit 70% on Thursday, their highest this year. Sterling rose to $1.2953, its highest since November 21, after the poll was released.

(GRAPHIC: Sterling vs. odds of Conservative majority in 2019 election –

Although the prospect of a Conservative win has been seen as positive for the pound, the case for more gains is not clear-cut, according to the currency derivative markets.

That’s partly because Brexit in January does not remove all the uncertainty pressuring the UK economy as it merely fires the starting gun for potentially protracted negotiations on a future free trade deal between Britain and the EU.

Demand for ‘put’ options to sell the pound in the future now outstrips demand for ‘call’ options to buy sterling, and this is reflected in the put premium contained in one-month “risk reversals” that straddle the election date.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.


Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.  Learn more