London mayoral election 2016: What do financial traders think will happen on 5 May?

 
James Nickerson
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City Hall Contest Continues As London Mayoral Election Nears
Traders overwhelmingly believe Khan will take City Hall for Labour (Source: Getty)

With just over two weeks until London elects its next mayor, polls are showing Sadiq Khan leading over Zac Goldsmith, with other candidates expected to finish some way behind the pair.

But while Khan and Goldsmith are not a million miles apart in the polls - or indeed with bookmakers - they are with financial traders.

IG Group, the online trading platform, has found that its clients "are overwhelmingly predicting Khan will become the next London mayor".

Read more: Is Boris Johnson helping or hindering Zac Goldsmith?

IG's London mayoral election barometer calculates an 88 per cent chance of Khan winning City Hall, leaving Goldsmith with a slim 12 per cent chance.

And some 90 per cent of all trades have been placed on Khan.

The market was a lot closer back in February when Khan was on 68 per cent and Goldsmith was on 32 per cent.

"Since the campaign kicked off in earnest the market has only moved in Khan’s direction, perhaps signalling that the Goldsmith tactic of trying to question Khan’s judgement is failing," said Matt Brief, head of dealing at IG Group.

Read more: Who are the mayoral candidates running for City Hall?

Unlike polling data, the market is forward looking, rather than backward looking.

Therefore, the market embodies "not just the wisdom of the crowds but more importantly of those willing to put hard cash on outcomes. Individuals with real, exclusive local information are disproportionately likely to place bets which means that the ensuing data tends to be remarkably accurate", Brief added.

They accurately called a victory for the “No” vote in the Scottish independence referendum from the start of 2014, and also correctly predicted Boris Johnson’s and Barack Obama’s respective 2012 election victories.

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