Above: Boris Johnson. File Image © Chatham House, Accessed Flickr, image subject to CC licensing.
– Poll shows 14 point lead for Conservatives
– Odds for Con. majority surge to 80%
– Sterling rally extends
– Late Labour surge looking increasingly unlikely
The British Pound hit a fresh 31-month high against the Euro Monday after two polls showed gains for the Conservative Party and losses for Labour, confirming expectations that the party of Prime Minister Boris Johnson remains on track to secure a majority.
A BMG poll for the Independent showed the Conservatives up two points to 41% and Labour down 1 point to 32%.
A poll out from Survation for ITV’s Good Morning Britain show had the Conservatives up 2 points to 45% and Labour down 2 points to 31%.
“As is normal as an election date draws closer, the level of respondents we interviewed who said they were undecided this week’s poll was 12%, down from 17% last week – and so some of the movement we are seeing in this week’s polling may be driven by the public, having seen the various TV debates and manifesto launches simply making their minds up,” says Survation, in a briefing on their latest poll findings.
On the Conservative Party’s ongoing strength, Survation says, “the Conservative party has increased support to some extent in this polling amongst both Leave and Remain voters.”
Any lead of over 7 points suggests an outright majority, while a lead of 14 points would signify something close to a landslide. “GBP is rallying again after markets all but fully discount a good Tory majority, ignoring the high number of undecided voters – Friday will show whether that was a good strategy or not,” says Elsa Lignos, Global Head of FX Strategy with RBC Capital Markets.
The polls suggest a Sterling-friendly trend remains in place with just four days to go until what is being billed as the most important election of a generation: the Pound-to-Euro exchange rate rose to its highest level since May 2017 when it reached 1.1893 on Monday. The Pound-to-Dollar exchange rate on the other hand is quoted at 1.3160, just below last week’s 7-month highs at 1.3162.
“Judging from recent polls, the most likely scenario is the Conservative party win majority government. If this scenario pans out, GBP/USD can edge higher towards 1.3500 over the next few weeks as the UK would be on the way towards an orderly Brexit on 31 January 2020,” says Kim Mundy, a foreign exchange strategist with CBA.
Above: Sterling in strong start to the new week.
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Survation’s equivalent poll in the 2017 election, released four days before polling day, showed the Conservative lead down to just one point, making Survation the most accurate pollster in the 2017 election.
This is Survation’s final poll for Good Morning Britain but it will be releasing further polls for other clients it has been confirmed.
Perhaps the most significant aspect of polling over recent days is a confirmation that Labour’s recent attack on the Conservative’s lead has stalled, ensuring the gap between the two parties is wide enough to allow the Conservatives a majority. In 2017 the rise in Labour’s vote share proved relentless, such that by the time of the vote they were able to close the gap to just two points. Foreign exchange markets have been on alert for a repeat of this performance in 2019, but with just four days to go until the vote and only three days in which to campaign, the closing of this gap by Labour looks to be a remote prospect.
A host of polls released at the weekend pout the Conservative lead at between 9 and 10 points.
The implied odds of a Conservative majority with the bookmakers has surged to a fresh campaign high of 80% on Monday, according to the Betfair Exchange. Last Friday saw odds sitting at 72.5%, while the start of the previous week saw odds closer to 65%.
“Bookies odds show a Tory majority as a near certainty, in line with the steady gap in most (but not all) opinion polls. But there is a historically high number of undecided voters which could affect as many as 80 marginal seats. We will be neutral GBP going into Thursday and look to trade the outcome,” says Lignos.
The steady rise in the odds for a Conservative majority has coincided with a broad-based rally in the value of Sterling as markets continue to see a majority win for the Conservatives as being the most market-friendly outcome. “Polls continue to show the Conservatives on course for a majority government after Thursday’s UK election, which would end the Brexit uncertainty and prove the most favourable outcome for GBP,” says Richard Pace, an options analyst with Thomson Reuters.
Above: GBP/EUR trades at multi-month highs on Monday.
* Time to move your money | Get industry-leading exchange rates and maximise your currency transfer with Global Reach. Speaking to a currency specialist will also helps you to capitalise on positive market shifts and make the most of your money. Find out more here. * Advertisement.
Various news sources are reporting Monday that Johnson will close his campaign in north England, where he will tour marginal seats in Labour’s ‘heartlands’ where he believes his message of delivering Brexit will strike a chord with jaded Labour voters.
Johnson will warn voters that they face a “great betrayal” under Jeremy Corbyn as he says that Labour MPs won their seats on a “false prospectus” of securing Brexit but subsequently “stuck two fingers up to the public”.
The Telegraph reports Johnson will visit every region of England and Wales to tell voters “that their instruction to leave the EU will be reversed by Islington-based Labour politicians who sneer at your values and ignore your votes”.
Labour will meanwhile attempt to steer the conversation away from Brexit and back on to the economy by announcing they would begin renationalising rail, mail and utilities within the first 100 days of a Corbyn administration.
Looking ahead, YouGov will release their final MRP projection on Tuesday. This is where YouGov take their most recent polling datasets and translate them into seat numbers.
“The MRP poll from YouGov seemed to more accurately predict the result of the 2017 election than any of its competitors, which is why the results of such a survey a few weeks ago caused a stir when it predicted a Conservative majority. However, that was relatively early in the campaign, so tomorrow night’s update from YouGov will be watched closely to see whether it shows any change in voting intentions as the day approaches,” says Rhys Herbert, an economist with Lloyds Bank.