Will the pound rise or fall on the UK election?

The UK election has gone from being one of the most certain to actually quite uncertain and with the price of the pound has reacted accordingly. The pound had initially risen on expectations of a strong Theresa May  victory but has now fallen as markets embrace the possibility of either a Corbyn win, a hung parliament or a weaker than expected Theresa May victory. The overall belief is still a Theresa May win but with the likelihood of a insignificant improvement in her current majority of 17 the scope for disappointment and sterling weakness is high.

If you have a transfer to make involving buying or selling the pound this week is crucial as the UK election triggers the next direction on what has been the biggest factor affecting sterling rates, ie Brexit. Whether the UK will be able to approach negotiations with confidence or on the back foot will be largely determined by the outcome of the election. However where Theresa May was ahead and the pound had risen we are now faced with a falling pound and increased uncertainty around the outcome.

Whilst I believe that Theresa May will win I think the Tory majority will not be enough to trigger a big rise in the value of the pound. I would anticipate a majority of closer to 50 than the 100 which would have been viewed as a landslide and the pound will fail to rise too much. Expectations for the pound are now very much mixed and depending on the outcome GBPEUR could end up as low as 1.10-1.11 or nearer to 1.18 or 1.19.

If you have a transfer to make buying or selling the pound then making some plans or movements sooner than later is recommended to avoid disappointment. Sitting on your hands and hoping for the best has never helped anyone get the a good deal!

For more information at no cost or obligation to help you plan and manage your exposure to the currency markets please speak to me Jonathan Watson, Associate Director at one of the UK’s largest independent currency brokerages by emailing [email protected].

Thank you for reading and I look forward to hearing from you.