YouGov’s seat-by-seat prediction poll for the UK’s general election offered the pound support as it revealed a Conservative victory is likely. The results showed that Boris Johnson’s Conservatives are likely to gain a comfortable majority of 68, while Jeremy Corbyn’s Labour will see its number of seats fall from 262 to 211. Sterling gained support as the likelihood of a Tory majority rose to 67.5 per cent, while the chances of a hung parliament fell to 28 per cent. However, the chances of a hung parliament do still remain, which limited pound gains.
Commenting on this, Kit Juckes, Société Generale wrote in a note to clients: “Apart from the fact that confidence in polls, and polling models, is pretty low, there’s also going to be a greater focus now on the lack of uncertainty about what happens after the election.”
Looking ahead, the pound could gain further support following the release of November’s GfK consumer confidence data.
If confidence in the UK rises despite ongoing uncertainty surrounding the general election and Brexit, Sterling could rally.
Meanwhile, the dollar remained flat after a mild overnight risk-off mood caused by concerns the US and China would clash over Hong Kong.
US President Donald Trump formally endorsed the Hong Kong protestors on Wednesday, signing legislation that would support anti-government protestors.
However, tensions increased as Beijing warned that it would take “firm counter-measures” if America continued to interfere, and added that the legislation was “doomed to fail”.
The increased tension suggests the US and China are moving further away from securing a “phase one” trade deal, and commenting on this, RBC Capital Markets’ chief currency strategist, Adam Cole said:
“The moves have been quite modest because we’re still waiting to see what China’s response is – what they’ve said so far is quite vague.
“They’ve not gone so far as to say explicitly that this threatens the phase one trade deal, which is clearly what markets are worrying about, and for that reason the reaction so far has been quite mild.”