Results confirmed that Prime Minister Johnson would secure a substantial majority of around 80 seats.

Risk appetite strengthened on reports that a phase-one US-China trade deal had been reached with USD/JPY at 1-week highs.

Equity markets made fresh gains with US indices at record highs, although an official announcement has not been made which triggered an element of caution.

Sterling spiked higher after the election exit poll indicated a larger Conservative majority with GBP/USD posting 19-month highs above 1.3500 before a correction.

Hopes for Brexit resolution also supported the Euro with EUR/USD at 6-week highs as ECB President Lagarde resisted an ultra-dovish stance.

The Swiss franc resisted sharp losses as the National Bank held rates at -0.75%.

Sterling declined sharply in Europe on Thursday amid low volumes as increased protection against sharp losses through derivatives had a negative impact. Choppy trading continued with GBP/USD lows near 1.3050 while EUR/GBP briefly moved above the 0.8500 level. The currency rallied again with improved global risk appetite also a positive factor.

The election exit poll forecast a substantial Conservative majority of 86. Sterling spiked very sharply on the exit poll with a GBP/USD move above 1.3450 while EUR/GBP dipped to 41-month lows below 0.8300.

Results confirmed that Prime Minister Johnson would secure a substantial majority of around 80 and there will, therefore, be a quick move to bring the Brexit Withdrawal Agreement back to parliament. There were strong expectations that the EU withdrawal would take place by the end of January 2020. In turn, an easing of political uncertainty would tend to boost near-term economic confidence and also potentially prevent any Bank of England move to cut interest rates.

GBP/USD traded to the highest level since May 2018 before hitting selling interest above 1.3500 and retreating to below 1.3450 with GBP/EUR gapping above 1.2000 at the Friday open.

Economic Calendar

13:30USD Core Retail Sales (M/M)(NOV)0.40%0.20%
13:30USD Advance Retail Sales (M/M)(NOV)0.40%0.30%
13:30USD Export Price Index (M/M)(NOV)-0.1-0.1
13:30USD Import Price Index (M/M)(NOV)-0.20%-0.50%
15:00USD Business Inventories(OCT)0.10%0.00%

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.