The Pound Sterling to Euro (GBP/EUR) exchange rate strengthened by more than 0.50% on Friday as it became clear that David Cameron will remain Prime Minister of Great Britain and that the Conservatives have won a majority. The Pound Sterling to US Dollar (GBP/USD) exchange rate made its biggest gain since 2009 as the result became clear.
The Pound Sterling to Euro (GBP/EUR) Exchange Rate Touched A Session High Of 1.3836
The Pound Sterling advanced strongly against the majority of its most traded peers as it became clear that the Conservatives won enough support to form a majority government. The outcome stunned the markets and observers and raises many questions over the pollsters who predicted the closest election for decades. In reality, the Tories are on course to win enough seats to form a majority government.
Ed Milliband’s Labour Party was wiped out in Scotland by the Scottish National Party (SNP) and his party performed poorly elsewhere. The Liberal Democrats were also decimated, raising questions over Nick Clegg’s position as party leader. Mr Milliband too is also likely to be replaced as Labour leader.
‘The strong result does take away that uncertainty which the market was most worried about, and that was more or less a hung parliament or a government that would have to continuously horse trade with minor parties. This is the kind of reaction you would expect with a solid result from the Conservatives,’ said Gregg Gibbs from Royal Bank of Scotland Group Plc, in an interview with Bloomberg.
In response to the vote, the Pound Sterling advanced sharply against its peers and shares are surging. The fact that the Conservatives have won a majority was good for the currency as certainty replaced the weeks of uncertainty that had preceded the vote.
‘The Conservative Party are perceived to be more market-friendly than a Labour government and that’s really at the core of the game. Having said that, with a Conservative government, some people will reassess their position in the long term on the increased risk of the UK exiting the EU,’ said Sebastian Galy, a currency strategist at Societe Generale SA.
The Pound Sterling to US Dollar (GBP/USD) Exchange Rate Reached A Session High of 1.5522
The Pound also surged against the US Dollar and strengthened by at least 1.2% against all 16 of its major counterparts.