The British pound surged against the dollar and the euro in the hours following the Prime Minister’s announcement of a snap general election taking place on June 8.
The pound started strong yesterday but plummeted against major currencies as Theresa May made her unexpected announcement. However, by the time she had finished her speech the pound had rebounded and hit a fresh three-month high against the euro, and a four-month high against the dollar.
The pound continued to soar and at around 2pm yesterday it hit the highest level of 2017.
Tuesday’s jump of just over 1.6 per cent was the currency’s biggest one-day rise since March last year, and the pound has held onto gains against both the dollar and the euro today, despite a drop from the initial hike. It is now at its highest level against the US dollar since last December.
Analysts say investors were buying the pound on hopes that a general election would hand the Theresa May more control as the UK braces for Brexit. It is thought a strong majority party will help provide a degree of stability while the UK negotiatea through the process of leaving the European Union
Independent lingerie retailers in the UK have been facing pricing battles following a wave of price hikes from suppliers in the wake of the falling pound. While the future still remains uncertain, experts are positive a general election is good news.
Paul Sirani, chief Market Analyst at Xtrade, told the press: “The realisation that the UK is now facing a snap general election should shore things up a bit, but there will be a number of peaks and troughs in the run-up to June 8th.”
“Investors will sit on their hands while the door-knocking gets underway, and we’d expect to see dollar-backers profit,” he continued.
The director-general for Confederation of British Industry (CBI), Carolyn Fairbairn, urges businesses to look at each political party and its plans to support economic stability and prosperity over the next Parliament in a way that is fair and sustainable for communities across the UK.
She remarked: “Distraction from the urgent priorities of seeking the best EU deal and improving UK productivity must be kept to a minimum. Firms will want to hear commitments from all parties to work in close partnership with business and back a new Industrial Strategy to make the UK economy the most competitive in the world by 2030.”