Pound jumps the most in more than three weeks


The currency climbs after Nigel Farage promises not to contest Tory seats
Newsfeed12 Nov 2019
Photo credit: AFP Photo


Market news selected by the DBS Chief Investment Office


The pound rallied on increased conviction the Conservatives will win December’s election after Brexit champion Nigel Farage pledged not to fight the ruling party.

The currency rose the most in more than three weeks after Farage, whose Brexit Party could have split votes for the Conservatives, said he wanted to prevent a second Brexit referendum and pledged to concentrate his efforts on preventing Labour Party candidates entering Parliament.

The pound has rebounded to near USD1.29 since hitting a near three-year low in September, on the back of UK Prime Minister Boris Johnson finally managing to secure a Brexit deal. For now, markets are fixated on the 12 December election and ignoring most other developments, with volatility rising as the vote comes into view.

“This means the market will price Conservatives getting a majority at this stage,” said a strategist. “This is ‘pound higher by 1% today’ sort of stuff.”

The currency’s focus on politics above all else was once again on show Monday (11 November), as the pound barely reacted to UK gross domestic product growth, only to move close to 1% on the political developments. Strategists had said a coalition between the Brexit Party and the ruling Conservatives could have been the worst outcome for the pound, as Farage’s lawmakers would likely seek a more distant relationship with the European Union (EU) and even push for a no-deal Brexit.

Still, though the news is positive for the UK currency, it is not “a game changer”, according the strategist. Even if the Conservatives were to keep all their seats from last time, that would still mean a hung Parliament, and the Brexit Party still plans to stand in seats which were won by the opposition Labour party last time.

The pound climbed nearly 1% to USD1.2898, the biggest gain since 17 October, before finishing up 0.63% to USD1.2855. It also strengthened by 0.6% to 85.70 pence per euro after touching a six-month peak. – Bloomberg News.

The US Dollar Index (DXY) erased 0.16% to 98.200 on Monday, the euro gained 0.14% to USD1.1033, and the yen closed 0.19% higher at 109.05 per dollar.


GENERAL DISCLOSURE/DISCLAIMER 

This information herein is published by DBS Bank Ltd. (“DBS Bank”) and is for information only.  This publication is intended for DBS Bank and its subsidiaries or affiliates (collectively “DBS”) and clients to whom it has been delivered and may not be reproduced, transmitted or communicated to any other person without the prior written permission of DBS Bank. 

This publication is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to you to subscribe to or to enter into any transaction as described, nor is it calculated to invite or permit the making of offers to the public to subscribe to or enter into any transaction for cash or other consideration and should not be viewed as such.

The information herein may be incomplete or condensed and it may not include a number of terms and provisions nor does it identify or define all or any of the risks associated to any actual transaction. Any terms, conditions and opinions contained herein may have been obtained from various sources and neither DBS nor any of their respective directors or employees (collectively the “DBS Group”) make any warranty, expressed or implied, as to its accuracy or completeness and thus assume no responsibility of it. The information herein may be subject to further revision, verification and updating and DBS Group undertakes no responsibility thereof.

All figures and amounts stated are for illustration purposes only and shall not bind DBS Group. This publication does not have regard to the specific investment objectives, financial situation or particular needs of any specific person. Before entering into any transaction to purchase any product mentioned in this publication, you should take steps to ensure that you understand the transaction and has made an independent assessment of the appropriateness of the transaction in light of your own objectives and circumstances. In particular, you should read all the relevant documentation pertaining to the product and may wish to seek advice from a financial or other professional adviser or make such independent investigations as you consider necessary or appropriate for such purposes. If you choose not to do so, you should consider carefully whether any product mentioned in this publication is suitable for you.  DBS Group does not act as an adviser and assumes no fiduciary responsibility or liability for any consequences, financial or otherwise, arising from any arrangement or entrance into any transaction in reliance on the information contained herein.  In order to build your own independent analysis of any transaction and its consequences, you should consult your own independent financial, accounting, tax, legal or other competent professional advisors as you deem appropriate to ensure that any assessment you make is suitable for you in light of your own financial, accounting, tax, and legal constraints and objectives without relying in any way on DBS Group or any position which DBS Group might have expressed in this document or orally to you in the discussion.

If this publication has been distributed by electronic transmission, such as e-mail, then such transmission cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. The sender therefore does not accept liability for any errors or omissions in the contents of the Information, which may arise as a result of electronic transmission. If verification is required, please request for a hard-copy version.

This publication is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

Singapore: This publication is distributed by DBS Bank Ltd (Company Regn. No. 196800306E) ("DBS") which is an Exempt Financial Adviser as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore (the "MAS").