The Great Britain pound soared today after the landslide victory of the Conservative party in the UK election. With Conservatives securing a majority in the House of Commons, chances for disorderly Brexit fell dramatically, though hard Brexit remains a possibility. Currently, the sterling has trimmed its gains but is still trading far above the opening level.
The Conservative Party of Prime Minister Boris Johnson achieved a convincing victory against the Labour Party, securing 364 seats versus Labour’s 203, way more than was needed for a majority — 326. It was the best result for Conservatives since the victory of Margaret Thatcher in 1987.
With the Conservative Party regaining the majority it had lost in 2017, Johnson can now push for a swift exit from the European Union he has promised. Indeed, he stated after the election victory:
We will get Brexit done on time by the 31st of January, no ifs, no buts, no maybes.
US President Donald Trump congratulated the UK Prime Minister on Twitter:
Congratulations to Boris Johnson on his great WIN! Britain and the United States will now be free to strike a massive new Trade Deal after BREXIT. This deal has the potential to be far bigger and more lucrative than any deal that could be made with the E.U. Celebrate Boris!
— Donald J. Trump (@realDonaldTrump) December 13, 2019
But the Brexit saga is far from over. If Britain indeed leaves the EU on January 31, it will leave just 11 months for the UK and the EU to secure a trade deal before the transition period ends on December 31. If no deal is achieved by that date and the transition period is not extended, the hard Brexit becomes a reality, which will not bode well for Britain’s economy.
Another issue is the fact that the Scottish National Party crashed both Conservatives and Labour in Scotland according to the election results. That led to speculations that Scotland may try to secure independence from the United Kingdom as Scots don’t want to leave the EU. SNP leader Nicola Sturgeon said she will make next week the case for an independence referendum:
The people of Scotland have spoken. It is time now to decide our own future. The Scottish government will next week publish the detailed, democratic case for a transfer of power to enable a referendum to be put beyond legal challenge.
GBP/USD climbed from 1.3160 to 1.3334 as of 14:12 GMT today, and its daily high of 1.3514 was the highest since May 2018. EUR/GBP fell from 0.08441 to 0.8376, reaching the low of 0.8276 intraday — the lowest since June 2016. GBP/JPY rallied from 143.88 to 145.67, while its session maximum of 147.95 was the highest since March 2019.
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