Will the pound rise or fall on the General Election?

An election is by nature an uncertain event and currency markets, by nature, don’t like uncertain events. The currency markets generally react more to bad news than good news and whilst there has been some positive sentiments following from the expectation the Tories will win a strong majority, I believe there does remain a large risk of the pound falling in the run up to and possibly after the election result, whoever wins.

The pound had strengthened on the back of the news of the snap election as it was felt this would lead to the UK getting a better deal on Brexit. The general impression was the pound would benefit as the chance of a bad or ‘hard’ Brexit is reduced for two reasons. One is that by having an election now the next isn’t until 2022. This means Theresa May will not be forced to rush through a deal before what would have been the next election in 2020 and won’t be distracted with an election in the final stages of Article 50 negotiations.

Second by increasing her majority in parliament Theresa May will not be relying on the more right wing factions in the party who have generally been more for a hard Brexit. More Tory MP’s supported Remain than Leave so a stronger Tory majority reduces the chance of a hard Brexit as they will be more inclined to support measures on a free trade deal.

If you have a transaction to consider in the future the General Election is a huge event and the pound is at risk of falling even if Theresa May wins. This is because once the result of the election is confirmed attention will then focus on the Brexit negotiations and the economic conditions in the UK which are deteriorating gently.

If you have a currency transfer involving buying or selling the pound and wish for some practical support with the planning and execution of a transaction around the election then please do feel free to get in touch with me Jonathan Watson by emailing [email protected]. I am very confident I can offer some practical support and assistance with a better exchange rate as well as the timing of any exchange you will need in the future.