THE POUND hit fresh two-and-a-half year highs against the euro this week, as markets steadied themselves for the General Election on Thursday.
The pound is trading against the euro at 1.1886, according to the latest data from Bloomberg at the time of writing. Sterling is enjoying a bumper week as analysts predict a Tory majority in Thursday’s General Election.
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Speaking exclusively to Express.co.uk Michael Brown, Senior Market Analyst, said: “Sterling hit a fresh two-and-a-half year high against the common currency on Monday, above the €1.19 handle, as market participants continued to price in a Tory majority as the most likely outcome of Thursday’s general election.
“Today, attention will remain on political developments, particularly this evening’s MRP poll from YouGov, seen as a more reliable indicator of the election result than traditional polls.
“Should the model point to a Tory majority, sterling should remain well-supported.”
Louis Bridger, General Manager for ICE in the UK & Ireland, looked at what each election outcome might mean for the pound.
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Exchange rate: The pound is enjoying a high against the euro this week (Image: Getty Images)
Tory majority
Betfair odds: 4/11
Louis said: “Boris Johnson has promised to pass his Brexit deal and bring in a Budget within 100 days if he is elected PM. If he is elected with a majority, this will likely fuel the pound’s recent gains by both increasing the possibility of the UK leaving the EU with a deal and by bringing some much-needed political certainty.
“It’s worth being mindful that these gains might be short-lived, though. A Conservative majority could mean the UK has more chance of crashing out without a trade deal at the end of 2020, which would likely have a very negative impact on GBP.
“Equally, if post-Brexit trade talks go on and on this will leave Britain with more uncertainty and probably prolonged ups and downs for sterling.”
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Labour majority
Betfair odds: 25/1
Louis continued: “While Labour’s proposed economic policies have been welcomed by some; they have been widely criticised as being potentially damaging for the UK economy.
“Because of this, there are fears that a Labour majority might cause a downturn for Sterling.
“On the other hand, any initial losses to the Pound after a Labour win could arguably be offset by the fact that it is pledging a People’s Vote with the potential to overturn Brexit.
“If Brexit was taken off the table, it’s likely we’d see huge gains for the Pound – since the referendum the markets have generally liked any news that keeps the UK linked closely to the EU and responded negatively when a no-deal Brexit has become more likely.”
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Hung parliament
Betfair odds: 25/1
Louis said: “If no party has a majority, the one with the most MPs can form a coalition – or partnership – with one or more other parties to gain control.
“If there’s a hung parliament with either the Tories or Labour propped up by the Liberal Democrats, this might result in gains for sterling.
“This is down to the fact that the Lib Dems would probably demand People’s Vote in return for lending their support (although Jo Swinson has not publicly warmed to the idea) and any possibility that the UK might remain in the EU could be good news for the pound.
“Another option is that the SNP would form a coalition government (unlikely with the Tories but could happen alongside Labour), which could potentially lead to further increased uncertainty.”
Exchange rate: Latest data from Bloomberg shows the pound trading at 1.1886 against the euro (Image: Bloomberg)
Should holidaymakers buy travel money now, or wait until after election day?
Louis advised: “The pound is in a fairly strong position now, so if you’re happy with the rate, it’s probably a good idea to lock in your rate before the election date and have no regrets. I always think that you’re probably more likely to kick yourself if the rate goes down than pat yourself on the back if the pound strengthens!
“Regardless of rate gains and losses, what will have the biggest impact on getting a good travel money deal is how you choose to exchange your money.”
The Post Office is offering 1.1473 euros to the pound for sums between £400 and £499. For sums over £1,000 it is offering 1.1699.
