Pound jumps as Farage-Johnson pact lowers risk of hung parliament
Sterling is set to receive a welcome boost after the Brexit Party said it will not come up against the Conservatives in 317 seats in the December election.
Brexit party leader Nigel Farage has announced he will stand aside in all the 317 seats won by the Tories in the 2017 general election, and will only fight seats held by other parties on December 12.
This move by Farage has given Johnson a significant boost in the election as he stands down Brexit party candidates.
Furthermore, this will give a boost to the pound, which over the years has been viewed as a Brexit bellwether.
It also lessens the chance of another hung parliament, which would have resulted in more crippling Brexit delays.
In turn, this would have led to more uncertainty, loathed by financial markets. As a result, Sterling has rallied on the announcement of this pact by Johnson and Farage.
A Conservative majority would provide the government with a greater ability to proceed with the Brexit process, looking ahead.
Indeed, wealth, jobs and businesses, both in Britain and around the world, have been calling out for certainty, and a majority government offers hope that the Brexit cloud that’s been shackling investment confidence could lift.
As such, should we see a Tory majority return in December, I believe the pound will hit $1.35.
Sterling will also receive a boost as the agreement is a severe setback for Jeremy Corbyn’s Labour party.
Corbyn’s anti-business stance, coupled with his high tax and low profit policies would result in substantial and sustained selling of the pound.
As I said last week, a Corbyn government would lead to Britain’s most successful and wealthiest people leaving the country; the people who make a significant contribution directly and indirectly to the UK economy.
The pound’s outlook will become more bullish in the coming weeks if the Conservatives continue to do well in the polls ahead of next month’s election.