Pound strong as polls point to Tory majority for Boris Johnson

Oscar Williams-Grut
Senior City Correspondent, Yahoo Finance UK
Boris Johnson poses for a photo wearing boxing gloves during a stop in his general election campaign trail at Jimmy Egan's Boxing Academy in Manchester, Britain. Photo: Frank Augstein/Reuters

Sterling rallied against the euro and dollar after a closely watched poll appeared to give Boris Johnson’s Conservative party a commanding lead ahead of the 12 December general election.

YouGov poll for the Times based on a seat-by-seat analysis, rather than voting share across the whole country, forecast the Tory party would win 359 seats, giving it a majority of 68 in parliament.

The ‘MRP’ technique used by YouGov (YOU.L) is the only modelling method that predicted a hung parliament ahead of the 2017 election, giving traders more confidence than in some other forecasts. Neil Wilson, a senior market analyst at Markets.com, said the poll was “widely-watched.”

“It’s easy to overstate the importance of this poll but as it backs up every other poll, the picture looks quite clear now,” Wilson said.

YouGov’s analysis came out late on Wednesday night, sparking a late rally foor sterling. The pound held on to the gains on Thursday night. Sterling was flat against the dollar at $1.294 (GBPUSD=X) and flat against the euro at €1.1752 (GBP/EUR=X).

“The likelihood of additional political turmoil appears to be diminishing for the time being, with the Tories well on the way to achieving a substantial majority,” said Marc-André Fongern, EMEA currency analyst at MAF Global Forex. “This has the potential to breathe new life into the UK pound.”

The pound’s strength follows a wobble earlier this week after two separate polls suggested the Tory Party’s lead in the polls was in fact narrowing.

Anthony Wells, YouGov’s director of political and social research, said in a statement: “As with all models, there is uncertainty.

“Taking into account the margins of error, our model puts the number of Conservative seats at between 328 and 385, meaning that while we can be confident that the Conservatives would currently get a majority, it could range from a modest one to a landslide.”