Exit poll sends UK assets into rally mode
In the immediate aftermath, we have seen GBPUSD surge
In the immediate aftermath, we have seen GBPUSD surge, gaining over 100 points as it gapped higher in the minutes following the exit poll, and continuing to gain to a high of $1.35 – the size of the majority has been taken as a sign that the uncertainty of recent years may be at an end, at least in one sense. An eighteen month high for GBPUSD marks an impressive recovery since the August low, and while we might see some profit-taking here, more inflows could keep boosting sterling.
It is a similar story for the pound against the euro – where sterling has gained too, hitting the highest level against the single currency since July 2016. Again, the big move might see some selling, but a return to UK assets could keep driving this one higher.
UK stocks might struggle a touch in the wake of this impressive sterling strength, but the FTSE 100 rallied sharply too. It has finally managed to rally off the 7150 zone of support, and now targets the 7440 highs of the last few months. Until it clears this level, then a longer-term rally is still in doubt. The US-China news announced before the exit poll could provide a fresh boost for the FTSE 100 too, given the number of heavyweight mining stocks.
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