Yesterday, sterling tentatively pushed to the 1.1700 mark against the euro for the first time since May as, once again, strong polling data signalled a greater likelihood of a Conservative majority government. Although the 11th hour election deal proposed by the Conservatives, as mentioned in yesterday’s article, came to nothing – markets found signs of encouragement not just in positive Conservative reports, but also in weak Brexit party polling numbers.
The single-issue party has slowly been haemorrhaging support since its highs of 20.2% in the EU elections, falling to a lowly 9.3% after the admission that they will not campaign on a manifesto; leaving floating voters largely in the dark about what they would be voting for after Brexit and, of course, the abandonment of 317 seats to allow the Tories a clear run.
With cracks appearing in the cult of Farage, the markets will now focus on whether the polls suggest the support is returning to its Labour or Conservative roots. Yesterday’s electoral estimations put a Conservative majority’s chances at 63%, the highest they have been so far in the campaign. If the Tories can continue to pick up northern voter support in Labour held leave areas at the expense of the Brexit party and Labour, then these estimations could continue to rise with the pound’s fortunes in tow.
However, the market will also be keenly aware that Labour has profited from the dip in Brexit Party support and anything that shows key northern leave seats are in danger of being split across leave lines, could taper sterling’s recent rise.
Have a great weekend ahead.