How will the general election affect the Pound? (Tom Holian)

Back in April when Prime Minister Theresa May announced the snap general election the Pound hit a 5 month high to buy Euros.

GBPEUR exchange rates improved as this provided the UK with some much needed stability at the time after the issue of Article 50 which was looming over the UK.

Typically when the existing government remains in power this tends to strengthen the Pound as it provides another term of financial stability for businesses that would usually take caution if a change in government occurs.

This time round it appears as though, as demonstrated with the local elections, that the Tories will win this election with a clear majority and therefore as this is expected to happen this may not provide the Pound with such a boost as some may expect.

We are just two weeks to go before the UK goes to the polls and at the moment according to the Financial Times poll of polls the Tories are winning with a lead of 46% compared to the Labour party of 33%.

With many countries in Europe celebrating Ascension Day then this could keep the markets fairly quiet today.

However, UK GDP figures are released in a few minutes and this could cause movement for the Pound against both the Euro and the US Dollar depending what happens with the data.

Recently the Pound has also been struggling owing to rising inflation levels. Typically this is a good thing for the Pound as it puts pressure on the Bank of England to look at raising interest rates.

However, as the BoE has been using QE in recent years I cannot foresee an interest rate hike coming anytime soon and this is causing a headache for the central bank.

Many of my clients have been using a Forward Contract which allows you to fix an exchange rate for a future date for a small deposit. This can be especially useful if you don’t have the full availability of funds at the moment but would like the peace of mind knowing what rate you can achieve based on current market prices.

If you would like a free quote when buying or selling currency then feel free to contact me directly and I look forward to hearing from you.

Tom Holian [email protected]