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Election Day FX Roundup

Election Day FX Roundup

Well, that was quite a day for movements in the currency market as the UK election result really surprised analysts by having a clear winner, rather than the need for a coalition of some kind. Friday showed continued movement for the GBP against the EUR and the USD as it soared significantly against both our principal currency pairs. The election’s end results gave the Conservative party the majority and the outright win in the British election, with a final result of 331 seats of a possible 650.

As for the currency markets now, the GBP/USD rally seems to have halted for the moment– the USD seems to have held more steadily even with the marginally soft jobs data on Friday. The way things look at the moment, my own opinion is that the GBP/USD rally is overcooked and we won’t continue to see any more rises from the election news. On the other hand, the GBP/EUR is more buoyant and has even begun the day today with a very slight gain. Certainly, a key factor will be consumer confidence, which has declined during the first two years of every parliament since such statistics were first collected in the 1970s.

Some foreign investor concerns would have been allayed on the news of a Conservative majority. However, some fears could remain given that the result will likely instigate a referendum on the British EU membership, and of course there will be the Scottish Independence issue as well.

As far as data today, we have the Bank of England Quantitative Easing and Interest Rate Policy decisions out today, though no forecast for any changes have been mooted by analysts. Later in the day we have some labour data for the States and Retail Sales Monitor for the UK. Things should quieten down today and provide a return to a measure of predictability. I hope.

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