In a resounding victory for the Conservative Party and the incumbent UK Prime Minister, Boris Johnson, the pound is expectedly holding on to impressive gains in what also turns out to be the largest single-day rally in 36 months. Rallying to $1.35, the GBP is up 2.3% against the U.S. Dollar as Forex market participants across the board reacts.
The UK Prime Minister will now lead the country out of the European Union by Jan 31, 2020, following public endorsement of his campaign slogan “get Brexit done.” This consequently clear doubts which is net-positive for an economy that has been in limbo since H2 2016.
On Dec 12, 2019, millions of Brits casted their votes on what had been touted as the most decisive and pivotal general election in 65 years. Safe the drama and scepticism around Boris Johnson’s trustworthiness and questionable character, he has nonetheless emerged victorious with a majority vote for the Conservative Party.
Retaining his seat, he received nominal votes of 25,351 votes, up from 23,716 of 2017. In Scotland, who were overwhelmingly supportive of a more unified Euro, the SNB also registered big gains. Of note, Jo Swinson lost to the Scottish National Party (SNP)’s Amy Callaghan. Following his victory, the PM said: “It does look like this conservative government has a powerful, new mandate. A mandate to get Brexit done. I want to thank the people of this country for voting in an election we didn't want to call. This gives us a chance to respect the will of the people. Our work will begin today.”
This result was consistent with the pre-election polls and a boost for the investor and FX trading communities who yearned for stability. The conservative party were expected to retain a majority of the seats. With the results out, the Tory now has the majority, winning 364 seats, up from 317 seats during the last General Election in 2017. This is the largest Conservative Party’s win since 1987. Overly, the Tory party got 13,941,200 votes against 10,292,054 votes of Jeremy Corbyn’s Labour Party. Nigel Farage’s Brexit Party had 642,303 votes.
For the Labour Party, the crash to 191 representatives, is their worst in 84 years. Many Labour MPs had shifted camps to support the Conservative Party as some had suffered for their opposition of Theresa May’s Brexit Campaign. Jeremy Corbyn has since stepped down as party leader.
Of note, this was a remarkable victory for a party that has spent the last two years limping in the shadows as a minority government. For the doldrums around Brexit, the GBP slid across various currency pairs in the wide and volatile FX market. Of note, the GBP/USD pair dropped to it’s all-time lows of $1.18. Boris’ victory is also a blow for the pro-Remainers. Before yesterday’s voting, they were urging voters to choose wisely, set their party preference aside and pick a leader who will “defeat the Tory leaders across the country”.
After Theresa May’s resignation in June, Boris Johnson had always hoped for an election to break the Parliament’s deadlock over Brexit. It must be noted that MPs had rejected the original Brexit vote although the country had voted in favor of an exit in a tight 51%-49% result that saw the GBP tumble to new lows. With his wish granted and the Liberal Democrats demolished, the PM who has previously said he will honor the date, will confidently lead the country in breaking loose from the EU.
Despite the landslide victory and a surging Pound, analysts expect a pullback in the immediate term. Nonetheless, traders can benefit from development made by BridgeCoin, a Stellar-based platform that is fusing crypto and the Forex markets. It acts as a payment gateway for the trillion-dollar market, connecting issuing and acquiring banks through their BD utility token, specifically designed for the volatile FX market.
Chris Turner, the Global Head of Strategy at ING, commenting on the GBP short-term outlook said: “Given what looks to be convincing a Conservative win, it seems unlikely that GBP/USD has too much more to rally in the very short term. The biggest one-day rally over the last five years (3%) has nearly been matched. Perhaps we could see a move to the 1.3550/75 area in Europe.”. Adding that: “As above, if the majority of the short-term GBP move has been seen, the focus shifts to UK interest rate and equities markets. These open at 0800 GMT and will presumably see some sizable adjustments.”
Meanwhile, in the cryptocurrency world, Bitcoin is largely unchanged and suppressed. Despite expectations of a supply shock in May 2020 when Bitcoin’s daily supply halves as hard-coded, buyers are having a hard time against determined sellers.
Analysts reckon that it will be imperative for BTC prices to steady above the $6,500-$7,000 support zone. Failure could see prices tumble to $5,500-$6,000 support zone in a move that could weaken the network’s security as weak miners are shaken out.