Tories win UK election- Sterling strengthens!

Thursday- Friday were an extremely busy 24 hours on the markets- exit polls on Thursday evening suggested that Conservative would swing the election, which caused the Pound to surge around 3% in 60 seconds- then the next morning the results showed that Conservative had won the election with a majority- which was unexpected! Now if you had read my previous article then you will know that my view was that in the unexpected case that Tories would win via majority then the Pound would strengthen massively- which is exactly what happened on Friday. The reason for this is that the markets love stability, after a Coalition government, for the UK to vote the Tories in via majority it shows that there is stability with our politics and people are happy for the Tories to continue, now whatever your political view, the economic facts speak for themselves, recent economic growth and employment figures have all been a result of David Cameron's government, and the markets know this, which is why there was a positive reaction to him being re-elected as prime minister.

Now the elections are over and certainty is restored back into the Pound, the focus will now go back to Greece, they are due to make their repayment on Tuesday, and only last Thursday they came out and said they are not willing to negotiate with Europe, so for anyone selling Euros, it may be beneficial to hedge yourself prior to Tuesday just in case we see the GBPEUR exchange rate over 1.40 again, as we got pretty close on Friday! Though a Greece exit seems impossible in my eyes, the media will keep this story on rotation which will cause the markets to move, so for now be weary of the speculation against Greece and mitigate your exposure!

As ever if you require any further information please don't hesitate to contact me directly.