Comment – Pound rises to seven month high as confidence in a Conservative victory grows

Commenting on the pound rising to a seven month high as confidence in a Conservative victory grows, Rupert Thompson, Head of Research at Kingswood, said: “The pound has risen to a seven month high as investor confidence in a Conservative victory has grown. Even so, while the polls continue to point to the Conservatives gaining a majority, it is still not a done deal. The danger of an outright Labour victory may be slight but if it did transpire, it would likely cause a slump in the pound. So, if market hopes of a Conservatives victory are vindicated, the pound will very likely strengthen further from $1.30 currently to maybe $1.35 or so. Even at $1.35, the pound would remain below the levels seen prior to the 2016 Brexit referendum. This would seem appropriate as, even with a Conservative victory, significant Brexit uncertainty will remain. While Johnson’s Brexit deal would almost certainly be ratified in short order if the Conservatives win, doubts will remain over whether the UK will be able to finalise a trade deal with the EU by the end of the transition period in December 2020. The risk of a No-Deal exit may be much reduced but it has not been eliminated altogether.”