Tue. Sep 29th, 2020

Pound surges after Conservative election triumph and US-China trade deal – business live

Rolling coverage as the financial markets react to the Conservative Party’s election triumph, and a breakthrough in the trade war

6.46am GMT

Neil Wilson of Markets.com says Johnson’s ‘thumping victory’ provides clarity for investors:

Sterling jumped sharply, enjoying its best gain in a decade as the Conservatives romped home to a convincing victory, while the FTSE also rose [in pre-market trading] as investors enjoy the Boris Bounce….

For the markets and for business this is the perfect result – a clear majority for the Tories, the Corbyn risk nullified entirely, a major reduction in uncertainty around Brexit and even a quick Budget to inject the economy with some added impetus. The only doubts are around the next phase of Brexit – the future relationship – but with a large majority the government will be in a better place to negotiate and do what it needs to do.

6.40am GMT

This chart shows how the pound surged to an 18-month high as soon as the exit poll was released.

It continued to climb as early results came in, smashing $1.35, in its biggest surge in a decade. That’s a gain of around 2.5%, or three cents.

The pound’s breaching of 1.20 versus the euro feels significant, and I would not be surprised to see sterling strengthen further from here.

Similarly, at the time of writing, the pound was trading at around 1.35 versus the US dollar; from here, it wouldn’t seem too outlandish to suggest that 1.40 could soon be within reach.

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