The pound has broken out of its weekly range again versus the USD & Euro as one poll now indicates the Tories command a 15 point lead over labour. Such a healthy lead at this late stage is being interpreted as bullish for GBP, although headwinds are still circulating; 2016 & 2017 polls pointed towards a Remain and Tory victory respectively, yet both instances the polls failed to materialise into actual results. This could be partly why GBP traders are seeking protection in the options market at the highest rate. Traders are purchasing ‘Put Options’ as a form of downside protection in case the election produces a hung parliament or a shock majority for Labour. Which would inevitably lead to GBP gains being undone.
In any case Thursday 12th December booths will open at 0700 GMT and close at 2200 GMT. The key risk for GBP will be exit polls, as victories in strongholds for either party may indicate that the Tory vote is stronger than previously predicted, conversely that Labour have managed to snatch some constituencies that are unhappy with Tories. Either way as liquidity will be low in early morning hours we can expect GBPUSD and GBPEUR to gyrate wildly until more traders enter the fray to stabilise the market.