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4th July 2024 | Election day: How today’s vote could change the FX market over the next 24 hours…

The next 24 hours:

  • A strong Labour win is predicted: Labour is still maintaining a 20-point lead in the polls against the Conservatives. A majority of 326 out of 560 seats is required, with some predictions suggesting Labour could win the largest majority since 1832 with 431 seats.
  • The French election remains undecided: The French go to the polls Sunday for the final round of their election, with the potential for a change in government and volatility in Euro exchange rates.
  • Will Biden step down? The US election is four months away, but increasing calls for Joe Biden to step aside could change the outlook for the US Dollar. Significant movements in the dollar often affect other currencies, including the pound and euro.

In Depth: Election Market Report

We are finally here, election day. While the result seems to be a foregone conclusion with a strong Labour majority, history and our experience tell us not to discount the unexpected when it comes to elections, votes, and the pound.

Sterling has been mildly supported by the prospect of a Labour majority, as currency markets favour certainty. The only information markets have had so far is poll data, which, while narrowing slightly, still has Labour around 20 points ahead of the Conservatives.

A strong Labour win is generally seen as supportive for sterling, while fewer seats than expected or a hung parliament could see sterling on the back foot. FX markets are notoriously volatile around elections, with an average movement of over 5% on GBPEUR in the last six UK General Elections, and 6% for the GBPUSD pairing.

Results will come in this evening and the early hours of tomorrow, with sterling markets likely to be sensitive to the news as it develops.

Are you considering a large currency purchase ahead? Maybe you are buying or selling property in the coming months. Even if you don’t need to send a payment or buy currency today, the news over the next 24 hours and Sunday’s final round of the French election could prove pivotal for GBPEUR rates in the coming weeks and months.

Key options to minimise your exposure to the FX market include:

  • E-Currency Wallet – Purchase your currency at today’s rate and hold funds here for future payment.
  • Forward Contract – Lock in your currency rate today but only pay a small deposit now, with the balance set for a (flexible) date of your choosing in the future.
  • Limit Order – Do you think the rate will go higher? Utilise a ‘Limit Order’ to automatically purchase if the rate reaches your target price. A great tool during a period of increased market volatility.
  • Stop/Loss Order – Worried that rates will fall? Utilise a ‘Stop Loss Order’ to set a minimum rate you cannot get worse than, should the market fall. Again, an important tool during increased market volatility.