Sterling tumbled from its highs of 1.1907 yesterday down to 1.18337 this morning upon the release of the YouGov MRP poll, which showed a greatly reduced Tory majority seat projection for tomorrow’s election. The MRP’s importance to the market cannot be ignored, as mentioned on the 28th in “The Polls and the Pound”, the poll was the only one to accurately predict a hung parliament for Mrs May back in the 2017 election, when all others pointed towards a Tory majority.
Despite showing a majority, the unsettling fact for Sterling is not only the drop from the previously estimated 68-seat majority down to 28, but also the drop is now within the margin of error for a hung parliament. Bookmakers now have the chances of a Tory majority back at 70% over 80% shown yesterday – any further deviation here coupled with last-minute polls releases tomorrow could spell more downside for the pound, as market speculators close out their bets before the election.
In the USA, a large release of inflation data at 13.30 will likely be overshadowed by the impending Federal rate decision to follow at 7 pm GMT. Although any large swings form the expected could cause dollar volatility, the majority of the movement will be dictated by the post-decision press conference at 19.30. As the decision to hold the rate where it is rather than cutting again, much to Trump’s irritation, is expected by the market, the press conference is a chance to unearth off the cuff comments on the future changes in 2020.
Have a great day,