It is weird how the market works sometimes. In the summer of 2016 the pound plunged due to the success of Leave in the EU referendum. Now, 3 and a half years on, it has surged on the back of an election result that guarantees an aggressive form of Brexit will happen.
Immediately following the exit poll on Thursday night the currency’s movements were hot-blooded, only growing as the thumping Tory majority was confirmed. Against the dollar it surged more than 2%, sporadically striking $1.35 for the first time in 19 months. Against the euro, meanwhile, a 1.7% rise took it across €1.202 – a price, ironically, it last hit just after the Brexit referendum in 2016.
You’d be forgiven for thinking that the general election would be Friday’s biggest news market-wise. And, for the UK, that’s arguably true. However, for the rest of the world far more important were reports that the US had reached a phase one trade agreement ‘in principle’ with China, just in time to avoid the next round of tariffs scheduled for this Sunday.
There is yet to be any confirmation of said deal, with China so far silent. However, not caring that their fingers have been burned in the past, the European and US indices rocketed higher. The Dow Jones should hit a fresh all-time high later this afternoon, a 120 point rise set to leave it at 28250, while the DAX and CAC climbed 1.2% and 1.3% respectively.
The FTSE, however, was left behind, missing out on the blockbuster growth due to the sheer strength of sterling’s gains. Nevertheless a 0.3% increase did keep it above 7300.
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