The pound briefly touched a 31-month high against the euro on Monday, as sterling continued to rally ahead of Thursday’s election.
The pound rose above €1.19 in early trade on Monday, its highest level against the single currency since May 2017. Sterling was up 0.1% against the euro to €1.1891 (GBPEUR=X) by just after 8.50am UK time.
Sterling also extended its rise against the dollar, up 0.2% to $1.316 (GBPUSD=X) at the same time.
The rise comes ahead of Thursday’s general election. Traders and investors are increasingly sure that Boris Johnson’s Conservative party will be able to secure a parliamentary majority, allowing them to advance Johnson’s Brexit deal and remove some of the uncertainty that has clouded British life over the last three years.
“According to recent polls, the Conservative Party remains comfortably in the lead, while in fact no significant surprise appears to be looming,” said Marc-André Fongern, a EMEA foreign exchange analyst at MAF Global Forex. “As such, the still slightly undervalued UK pound continues to be fairly competitive.”
A Survation poll for ITV’s Good Morning Britain on Monday gave Johnson a 14-point lead on nearest rivals Labour. Britain Elect’s poll of polls gives the Tory Party a 10-point lead over Labour, a lead it has consistently held since the election was called.
“If the outcome is in line with the current polling data, then sterling could make further gains,” said Conor Beakey, an economist at AIB.
“However, these could prove to be relatively short lived, once attention turns to trade talks in 2020 and the high degree of risk and uncertainty that these will entail.”