Pound Logs Gains Ahead of Thursday’s Election

Stacks of coins and a fan of pound notesThe Great Britain pound rose today even as markets remained cautious ahead of tomorrow’s general election, which may have a tremendous impact on the currency, and not necessarily a positive one.

Opinion polls remained divided over the outcome of the voting. While some polls were promising a strong (though narrowing) lead of the ruling Conservative party, others showed that neither the Tories, nor the Labour party will get a majority, resulting in a hung parliament. The latter outcome would be very negative for the currency.

Some hedge funds were placing bearish bets on the pound regardless of the election outcome. Their reasoning was that markets largely disregarded the Brexit, therefore the likely negative repercussions of the event were not priced in.

On the data front, the Halifax House Price Index rose 0.4% in May instead of falling by 0.2% as analysts had predicted. While the monthly reading looked good, the annual growth in the three months through May was at 3.3% — the slowest in four years.

GBP/USD traded at about 1.2914 as of 16:47 GMT today, near the opening level of 1.2906, after rallying to the daily high of 1.2967. GBP/JPY gained from 141.19 to 141.40. EUR/GBP dropped from 0.8733 to 0.8706, touching the daily low of 0.8676.

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