GBP/USD surges, Brexit Party won’t contest Tory seats
Brexit champion Neil Farage boosts chance of Tory election victory by not challenging Tory seats. UK GDP data weak but recession avoided.
Cable shot higher in London trading after Brexit Party leader Neil Farage announced his party would not challenge Conservative Party seats in the upcoming December UK elections, thus substantially increasing the possibility that Prime Minister Boris Johnson can form a solid majority government.
UK third quarter economic data came in at 0.3 last quarter, as expected. Second quarter GDP was negative, so the UK has managed to avoid a recession but annual growth is running at just 1%, the slowest in almost a decade.
GBP/USD surged almost 1% on the Farage news, nearly hitting the $1.29 level before pulling back to around $1.2875.
UK monetary policy on hold during election
Bank of England (BoE) policy makers are unable to signal their reaction to the latest GDP data while the election campaign is ongoing. It is a tradition that BoE remain quiet during elections to avoid perceptions of bias.
Thus not only will there be no decision on any interest rate moves, but the BoE is unable to signal its intent through any public statements nor will any officials be giving speeches during the period.
It is unlikely that the BoE will move to adjust interest rates until January, but analysts say that Brexit developments will be in the fore when it comes to influencing cable, with economic and policy information taking a back seat.
The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.
Trade on election results
- Go long or short with CFDs
- Speculate on key markets – including British indices, shares and forex pairs
- Manage your risk with our range of stops and limits
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
You might be interested in…
Find out what charges your trades could incur with our transparent fee structure.
Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.
Stay on top of upcoming market-moving events with our customisable economic calendar.