As the General Election approaches on 12th December, the polls suggest that we will see a Conservative majority.  However, some recent polls have shown Labour narrowing that lead, as they did ahead of the 2017 election. There has been a direct correlation between how sterling performs and the chances of a Conservative majority, with sterling higher as a result. GBPUSD is currently above 1.30, and GBP/EUR around 1.1750.

In 2017, the original lead narrowed and no party had a majority.  This could easily happen again as we go into the final week of campaigning. This time, however, if there is no majority, expectations are for a Labour government to be more likely to form a minority government. 

Polling stations will close at 10pm on Thursday 12th December. Results from each of the constituencies will come in through the night, with a good chance that the result is known in the early hours.  We expect most of the volatility in sterling to occur during the night as results come in. The final results will be available mid-morning on Friday 13th.

What are the potential outcomes?


1. Conservative Majority – 100% –  GBPUSD>>1.35, GBPEUR>>1.21

Market forecasts are for a 3-5% increase in the value of sterling in this case (though that will depend on moves in the run-up to the election). This would give clarity to the Brexit process with agreement on the Withdrawal Agreement likely and the UK expected to leave the EU prior to the end January deadline.  MAYBE cut out – This would then shift the focus to the negotiation of a new trade deal, with sterling fortunes likely to refocus on those discussions.

2. Hung Parliament – 0% – GBPUSD>>1.27, GBPEUR>>1.15

This outcome would lead to significant uncertainty over how we move forward to form a new government, with a Labour minority government more likely.  Sterling would likely drop several % in response to this outcome given the recent moves we have seen.

This would lead to the following potential outcomes: 

  • Conservative minority government – It is highly likely the Conservatives would still have the largest number of seats.  They may be able to form a minority government as in 2017, potentially with the DUP, Brexit Party and/or Independents. This would likely lead to the ability to agree the Withdrawal Agreement, so a short term hit to sterling may well give way to a move higher.
  • Labour minority government – The more likely outcome is that Labour would attempt to form a Government with the SNP and potentially others.  This would almost certainly lead to an independence referendum for Scotland, whilst going back to the EU to renegotiate the Withdrawal Bill, followed by a new EU referendum.  It is unlikely the markets would respond well to this and sterling would likely fall several % more.

3. Labour Majority – 0% – GBPUSD>>1.24, GBPEUR>>1.13

Whilst highly unlikely, this would potentially represent the largest downside for sterling with some analysts suggesting a 4-5% depreciation.  However, although Labours plans of Large-scale borrowing and increased taxation, the potential for an EU referendum may provide a longer term boost. 

How we can help


  • Firstly, we are here to guide you through these troubled timeshere in the run up to the election to discuss your exposures and available through election night to answer any questions, place deals and manage our clients’ orders.
  • Placing orders – We help our clients to achieve a rate that works for them or their business.  This can be either to protect from excessive drops in currency rates, or as target to take advantage of swings in the market.
  • Fixing rates forward – Given the level of volatility in the markets, we can protect your business by fixing the rate you purchase or sell currency at for a period into the future.  It often works well to protect a portion of your exposure in this way, but not usually all of it. We can also combine these with market orders. 
  • Insurance against large moves – We are able to help you mitigate any significant currency moves whilst you retain flexibility over your exposures.
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