The pound hit a 31-month high against the euro this morning as the Conservatives edged closer to victory in the 12 December General Election.
The latest poll, from Savanta Com Res last night, put the Tories ten points ahead of Labour, boosting traders hopes’ that a Boris Johnson-led government would leave the European Union with a deal and bring some certainty to the economy.
The pound climbed against the euro to €1.186 this morning – a level not seen since May 2017 – before slipping back slightly. It sat at €1.184 by 10am.
Sterling was 0.2 per cent higher against the dollar to buy $1.313, a seven-month high.
“Sterling rallied on continued optimism about a Conservative win in the General Election and, as one wag put it, an absence of an absence of gaffes from Boris Johnson,” said Kit Juckes, foreign exchange analyst at Societe Generale.
He said that “sterling is on the side of the bookies, clearly” but said “chasing sterling here makes little sense”.
Juckes also cautioned that a hung parliament is easily possible. The Savanta Com Res poll had 21 per cent of respondents saying they were undecided.
Deutsche Bank’s Jim Reid pointed out that “sterling was the strongest performing G10 currency for the second day running” yesterday.
Chris Beauchamp of trading platform IG said: “All this could look decidedly wrong-headed if the election does not go the way the polls suggest, but sterling bulls continue to enjoy their day in the sun.”