It’s Brexit, stupid

It’s Brexit, stupid

It’s been a long night but not necessarily one of too many surprises, with results closely reflecting what the exit polls told us at 10pm on Thursday.

If that wasn’t clear, just take a look at the pound which was tucked up in bed shortly after the exit poll while the rest of us stayed the course, on the off-chance that British politics had one more surprise in store for us.

On this occasion, the biggest surprise is that the election has gone as all the polls predicted. In fact, the Conservatives are on course to get an even greater majority than expected and at no point through the course of the night has that looked in doubt.

The feeling of fatigue is nothing new for those of us that has followed British politics over the last four years but there is a sense that we’re finally seeing the light at the end of the Brexit tunnel and that’s what we’re seeing reflected in the pound.

GBPUSD Daily Chart

EURGBP Weekly Chart

UK 100 (FTSE 100)

It’s interesting that, while the pound hasn’t continued to march on higher – give it time – it hasn’t really pared gains either. It remains up more than 2% and has hit an 18-month high in the process. The UK 100 (FTSE 100) is making small gains

Whatever you think of the result, it’s clear that this result partially lifts the cloud of uncertainty that’s held back the currency and the economy for so long. As the old adage goes, the markets hate uncertainty. As we know, they’re not too fond of Brexit either, but that’s a discussion for another day.

It’s been debated throughout the night why the Conservatives have made gains in so many traditional Labour strongholds, with everything from Corbyn to his socialist agenda coming in the firing line. While both of these may be major contributing factors, there’s one thing that’s clearly been the driving force behind the Conservatives victory and Labours shambolic performance.

It’s Brexit, stupid!

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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.