EDITOR’S NOTE: Luke Trevail, a currency exchange specialist at forex brokers TorFX, looks at the factors driving the pound’s exchange rate in the week gone by.
The political spinning top has created a huge amount of uncertainty this week. Now, with less than a week to go until the British public vote for the next Prime Minister, Sterling is on its knees and traders like me are being forced to pray for a Conservative majority to allow the pound to regain some of the losses it’s been subject to.
We’ve lost around 4% against the euro in around two weeks as Jeremy Corbyn’s Labour Party beg, steal, and borrow their way to more voters going red according to the latest polls. The Tory majority that Theresa May enjoyed in early campaigning has been almost overturned by the country’s best, if least glamourous, campaigner Jeremy Corbyn.
Mrs May has consistently reminded voters that the next PM will be the chief negotiator in the divorce from Europe that we voted for in last year’s referendum. Her argument is that a ‘strong and stable’ hand will get the best deal for Britain. But Corbyn has managed to get traction with a campaign about more than just leaving the EU, important though that may be. He has made his campaign about the day-to-day running of the country, and tapped into people’s apparent disdain for foreign politics. Though not perceived as strong on the EU,, he is seen as fair.
Can a pacifist hold his own given the current climate and the ongoing ‘war on terror’, which seems to be getting more and more ferocious? I’m not convinced. Is Theresa May a one trick pony that is only worried about Brexit and will ‘deal with the other stuff’ when she can be bothered? Possibly.
The market seems to think that a Conservative victory will be good for the pound, and anything else could be close to disastrous. A Hung Parliament is possibly the worst case scenario for Sterling, and this cannot be ruled out.
Hold onto your hats next week, we’ve been here before and the market is nervous. Those of you wanting to avoid the circus can get in touch before the jugglers and clowns put on their show next Thursday.
This article is written by a foreign-currency broker working for TorFX, a forex broker established in 2004 to provide foreign exchange and international payments to both individuals and companies. TorFX is authorised by the Financial Conduct Authority under the Payment Service Regulations 2009 for the provision of payment services. Their FCA number is 517320. To verify their authorisation, you can visit the Financial Services Register and search the register using their FCA number. SPI is not responsible for the opinions of guest contributors.
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