ACM Pre Election update 11/12/19

“It’s the Final Countdown”. Aptly, the 1986 song was sung by the band ‘Europe’. Will we be in Europe in a few years or not? Tomorrow’s UK General Election result will go a long way to deciding that.

We are in the final throes of political bickering and‘personality’ politics before votes are cast at ballot boxes across the country. The term the ‘devil is in the detail’ probably applies to every sentence uttered by our esteemed political elite in the past few weeks. Cynical perhaps.

As detailed previously we expect a Conservative majority at the General election. However, the threat for Sterling of a hung parliament looms large. Whilst according to the various polls there ‘should’ be a Conservative majority, we know from recent history that polls have the habit,occasionally, of being completely and utterly wrong.

We expect Sterling will have a spike higher on a majority although the move will be modest. Should we have a hung parliament then expect the sell off on Cable (GBP/USD) and GBP/EUR to potentially be severe. Various projections are for anything up to 10%.

I can’t emphasise the potential Sterling risk enough. Please contact your relationship manager or a member of the trading department to discuss your specific requirements this afternoon. Have a plan and strategy in place to mitigate your risk.

However, one person’s risk is another’s opportunity. Should you be selling Dollars or Euro’s back to Sterling cover some on SPOT this afternoon and then implement a take profit order. Please discuss technical levels with our trading department.

The traders will be in overnight on Thursday/Friday early morning to make sure we can assist clients through the no doubt volatile markets.

You can view the graph over the past 48 hours on GBP/USD –

There will be numerous spikes and dips over the next 48 hours so make sure you are in a position to take advantage.

On Sterling/Euro, the same applies.

You can view the graph over the past 48 hours on GBP/EUR –

We expect a breakthrough of 1.20 the figure on Sterling/Euro so consider implementing orders at that level overnight Thursday. Please contact the trading department to implement an order. If you are selling Euro’s into Sterling again, please discuss technical levels with the trading team.

Whilst evidently market attention is focused on the UK General Election we have the Federal Reserve Interest rate decision this evening (UK time) with rates to be left on hold at 1.75%. On Thursday we have the ECB interest rate decision (won’t be any change) and then we have the ECB Monetary Policy Statement and Press conference.

Once the General Election is out the way we can focus on mulled wine and mince pies. Until then, it’s tin hat time over the next 48 hours for the currency markets.

If you have any specific requirements or questions please feel free to get in touch directly with me.

Happy Election folks!

Written by Liam Alexander

written by

Liam Alexander

Liam Alexander is the CCO at Aston Currency Management.