British Pound Surged Over Expected Majority for Conservatives

BANGKOK, Thailand – Friday’s trading session was optimistic for the British pound following the claims of the Conservative Party led by Prime Minister Boris Johnson on the robust majority after the UK general elections on Thursday.

Late Thursday, the British pound closed at $1.3385 but surged towards $1.3425 on Friday amid the positive projections that the conservatives are likely to win the elections, putting them on a solid majority of seats in the Parliament. The predicted win for the Conservative party will give more chances for Johnson to push for the departure of the United Kingdom from the European Union, which is expected by the end of January 2020.

According to Krishna Guha, an analyst at Evercore, the gains for today is the most positive outcome for the British pound near term.

Elsewhere, most of the stocks in Asia recorded gains at the end of the trading week. The Nikkei index in Japan jumped by 2.6%, while the Hang Seng index in Hong Kong advanced by 2.2%. The Kospi index in South Korea also tracked gains at around 1.5%, while the Shanghai Composite ended the week with a 1.8% increase.

Aside from the optimistic results of the UK general elections on Thursday, the gains in the market were also boosted by the increasing sentiments towards the agreement of the US and China to end the long-standing trade war.

Market players were largely encouraged after a report in the Wall Street Journal said that the US is going to cut the existing tariffs on Chinese goods and cancel the ones expected on December 15.

According to the chief investment officer at EventShares, Ben Phillips, the removal of the tariffs suggests that China must be agreeing to what the US wants.

Global markets have been closely looking towards the developments on the trade agreements, and the new headlines have the markets reacting quick.

The S&P 500 index surged by around 0.9% to reach 3,168.57, which is around 0.5% higher from its last all-time high on November 27.

The Dow Jones index also gained by 0.8% following the optimistic trade deal signing, while the Nasdaq index advanced by around 0.7%.

The Russell 2000 index also cashed in on trade updates, recording a 0.8% increase to reach 1,644.81.

According to the Ministry of Commerce in China on Thursday, the Chinese trade negotiators are still in close communication with the trade officials of the US ahead of the new tariff hiked expected to take effect on December 15.

Late on Thursday, the head of international affairs of the US Chamber of Commerce, Myron Brilliant, also confirmed that trade negotiators from both governments are close to signing phase one of the trade deal, which would reduce existing tariffs and suspend the upcoming ones.