Pound gains as Conservatives lead vote in U.K. election

Pound gains as Conservatives lead vote in U.K. election

MW-DI638_Pound__ZG_20150330110824The British pound rose against major currencies on Friday, as early results and exit surveys point to a possible clear victory for the Conservative party, unlike pre-election polls results.

Conservative 329, Labour 234, the Lib Dems eight, the SNP 56, Plaid Cymru three, UKIP one, the Greens one and others 19, according to BBC forecasts.

So far, this result would enable David Cameron to form a majority in the Commons.

It is important to notice that historically the sterling tended to react positively to the win of the Conservative Party in elections.

After showing sharp volatility overnight, the pound advanced against major currencies on stability and consistency in the coming government.

Now, investors see the Conservative party would continue with its agenda, without dramatic changes.

Fears of seeing a hung Parliament now eased, as the Conservatives are likely to acquire 37 percent of national votes.

The FTSE 100 climbed more than 1.6% in early trading.

However, some analysts expect the rally to be short-lived on worries over a possible Britain leaving the European Union or “Brexit,” with a referendum on the UK’s EU membership now likely to occur in 2017.

As of 10:00 GMT, the GBPUSD traded around 1.5470, after recording a high of 1.5520, where the GBPEUR and GBPJPY pairs saw a huge upside gap.

On the GBPUSD daily charts, the RSI 14 momentum indicator faces some volatility as it approaches the 70 line.


Ahmed Mamdouh

Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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