Pound BOOST: Pound sterling set to SOAR after general election victory

Pound BOOST: Pound sterling set to SOAR after general election victory

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The Tory win has sent City into fits of speculation the pound will peak above $1.45, regaining the ground it lost since the referendum to leave in 2016. The sterling surge is expected to draw foreign investment back to the UK and make swell the profits of currency traders who bought into the Bull run on the pound on the eve of last Thursdays election. Such a significant move, from the current level of $1.33, would slash the cost of imports, reduce living costs and hand families greater spending power to boost the rest of the .

Senior strategist Mansoor Mohi-uddin said: “Sterling is set to rally into a higher $1.35-$1.45 range near term against the greenback as an orderly exit from the European Union in January and the increased chances of smoother trade negotiations during 2020 lift confidence in the UK economy.”

International and domestic businesses are also expected to unleash pent-up spending as confidence in the financial markets builds, according to Samuel Tombs at Pantheon Macroeconomics.

He said: “Business confidence should recover, now that a no-deal Brexit isn’t a risk in January 2020 and the outlook for domestic policy over the next five years is relatively clear.

“Many firms will be able to invest, knowing that corporation tax likely won’t rise, wages won’t increase rapidly and Labour’s socialist agenda will not be implemented soon.”

Pound has risen against the US dollar

Pound has risen against the US dollar (Image: GETTY)

Wall Street titan Goldman Sachs predicted Britain will benefit from an array of stimuli under Mr Johnson.

Its economist Adrian Paul said that as well as renewed business investment, “a pick-up in global growth” and increased public spending should means GDP growth in the second half of 2020 to hit an annualised 2.4pc.

Since the successful election result at the election for the Conservatives the pound has risen healthily against the euro and dollar.

Commenting on the FTSE 250, Russ Mould, investment director at AJ Bell, said: “The FTSE 250 is up by quite a bit more than the megacaps of the FTSE 100, with a rise of four percent.

Pound has risen against the US dollar

Pound has risen against the US dollar (Image: GETTY)

“This is because the mid-cap benchmark contains more names which rely on the UK for their business and a stronger pound may even help them, by capping imported raw material costs for them, tamping down inflation and therefore putting more money in consumers’ pockets on a real-terms, post-inflation basis.

“Leading gainers therefore include mortgage lender Virgin Money UK (which may also be responding to pre-election promises to look at cutting stamp duty land tax), estate agent Savills, house builder Bellway, buy-to-let lender OneSavings Bank and builders’ merchant Travis Perkins.

“Other notable gainers include firms who have dodged the threat of having their assets nationalised, such as rail franchise operators Stagecoach and Go-Ahead Group and water utility Pennon.”

Michael Brown, Senior Analyst at Caxton has said the pound to euro exchange rate is close to a three-and-a-half year high, while the pound is trading at an 18 month high against the dollar.

READ MORE: Deutsche Bank CEO fears central banks have no tools left to ‘cushion’

Pound has risen against the US dollar

Pound has risen against the Euro (Image: GETTY)

Commenting on the pound, Mr Brown said: “After yesterday’s general election resulted in a Tory landslide, Sterling has skyrocketed by more than two percent, with the margin of victory being much wider than markets had priced in.

“The pound is currently trading near a three-and-a-half year high against the euro and an 18 month high against the dollar.

“The election outcome is the ideal one for sterling for three reasons. Firstly, the Tories have won a clear majority, allowing a smooth and orderly Brexit to take place at the end of January.

“Secondly, with such a vast majority, PM Johnson has a significant degree of flexibility over the Brexit process, perhaps to pursue a ‘softer’ Brexit and closer relationship with the EU or to extend the transition period if he desires to do either.

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Pound has risen against the US dollar

Pound has risen against the US dollar (Image: GETTY)

“Thirdly, after Labour’s disastrous night, the market is pricing out ‘Corbyn risk’ with the Labour leader’s tenure clearly over.

“Going forward, sterling should remain relatively well-supported, with focus likely remaining on the Brexit process rather than the economic fundamentals.”

Amid the General Election 2019 results, holidaymakers have been issued with some insight.

EU currencies

EU currencies (Image: Express)

Rob Stross, CMO of the UK’s number one P2P travel money provider commented: “With this election result, the pound gained in value dramatically, meaning holidaymakers will get more foreign currency per pound than yesterday.

“However, Brexit is still looming and has caused huge fluctuations in value, so holidaymakers should look at planning ahead to get the best deal rather than wait until the day before they travel.”

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