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UK election in the spotlight for Sterling strength

  • When will we know what will happen in the election?
  • What other economic developments are on the radar this week?
  • Christine Lagarde kicks off European Central Bank tenure
  • US central bank and consumer data drive Dollar
  • Australian economy caught in China-US crossfire

Your Weekly Currency Insights – UK Election Special

The General Election in the UK is currently dominating market, business and consumer sentiment. Dubbed “The Brexit Election”, the results of this election will have a significant impact on Sterling strength, whatever the outcome, and indeed, wherever one’s personal political allegiances may lie.

Expect volatility for the Pound as we push into poll results throughout Thursday evening and Friday morning and get in touch if you have any international payments to make in the coming days from Sterling into any of its currency partners. Read more from the Halo Financial team about predictions for the Pound, considering the effects of different election scenarios on Sterling.

When will we know what will happen in the election?

10:00pm Thursday, 12th December

The exit poll will be released once voting is complete across all constituencies and will be the focus for market and media attention alike until the results start to come in.

12:00am

The early results tend to trickle through around midnight, perhaps a little before. A large portion of the constituencies that are traditional Labour strongholds will come through in the early hours of Friday morning. That may well be considered to set the tone and Sterling will react to this early stimulus.

Following these figures, voting results will come through in a flurry as Friday morning unfolds. Some of the marginal seats and those in Scotland and Wales in particular will be significant. A picture of the potential final election result should start to emerge by around 5:30am on Friday. It is worth noting that London and the South East are often slower to show their hand, so this could also have a marked impact on the result, given the Brexit voting sentiment in the regions around London and the Remain domination in the capital.

5:30am Friday, 13th December

Sterling will be susceptible to shocks as European trading starts. By this time, we should have the results from most constituencies, but we have learned from previous years that there are usually some late-runners and some votes that need to be recounted, which can throw a last-minute spanner in the works. Sterling will be volatile right up until around midday on Friday and beyond as the final result becomes clear.

What other economic developments are on the radar this week?

Central bank and consumer data in focus for Dollar fortunes

The big news for the USA today is the Federal Reserve speech on Wednesday 11th December. Markets will be keeping a close watch on what is said to make predictions for the sense of direction for the US economy and glean some insight into what monetary policy will look like for the year ahead.

Friday brings retail sales data for the USA, which will be another strong indication of the health of the US economy. Forecasts are for a positive result after record Black Friday and Cyber Monday spending levels. The other influence on the US markets is the ongoing disagreement between America and China over trade tariffs. A deadline for increased tariffs on Chinese goods arrives on the 15th December, if there is no last minute tinkering.

Christine Lagarde kicks off European Central Bank tenure

The European Central Bank (ECB) also had their final meeting of 2019 with new leader, Christine Lagarde, at the helm. Mrs Lagarde certainly has some choppy waters to navigate in the coming year; not least getting some agreement among the central bank’s own people, managing calls for much looser monetary policy and the unknown impact of the Brexit election and the Brexit process.

Australian data is mixed

A sharp drop in Australian consumer sentiment was yet another call to action for the Reserve Bank of Australia. Aussie data is so very mixed, but pressure from a slowdown in China, Australia’s largest export market, is affecting raw material exports, with consequences for many areas of Australia; especially those that rely on mining and ore extraction.

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