The FTSE is expected to rise around 30pts at 7,300 when trading gets underway at the London stock exchange at 08:00.
Neil Wilson, chief market analyst at Markets.com said, “The Conservative Party has secured an historic mandate with a thumping victory, providing clarity for investors where there was confusion.
“There is some uncertainty over how a stronger pound will impact the market. However, one feels that once the big money starts flowing the FTSE 100 should be moving higher despite a clear drag from the stronger pound, which will cap gains.”
Ranko Berich, Head of Market Analysis at Monex Europe comments:
“In a novel change for markets, this morning’s political developments have seen sterling climb up a cliff instead of falling off one. Boris Johnson’s commanding majority has a number of implications for the pound, but important questions remain unanswered and so, for now, sterling’s rally may struggle to extend much further.
“The size of the Conservative majority has important implications for Brexit. Boris Johnson now has a wealth of options for dealing with the EU, but the trajectory of trade talks remains a major unknown factor for sterling at the moment. With a stronger hand for dealing with eurosceptic hardliners, Johnson is in a position to offer concessions for a free trade deal, such as the border in the Irish Sea that enabled his withdrawal agreement breakthrough. But a strong majority could prove a double edged sword for sterling as the new Government could decide its majority means it has a strong hand for hardball tactics with the EU.
“Despite questions remaining over future relations with the EU, tonight’s events represent a material reduction in overall uncertainty. This is important for sterling, hence the 3% rally we’ve seen on the night. Despite this, sterling remains well below pre-referendum levels. How far sterling can continue to rally over the next 12 months will depend on how much momentum the economy can regain. This will depend heavily on the behavior of UK businesses, which have choked off investment for much of the past two years. If UK businesses begin to invest again, combined with looser fiscal policy, the economy will enjoy a post-Brexit bump in 2020, enabling sterling to at least get a glimpse of the sunlit uplands of pre-referendum levels.”
Ranko Berich, Head of Market Analysis at Monex Europe said, “In a novel change for markets, this morning’s political developments have seen sterling climb up a cliff instead of falling off one. Boris Johnson’s commanding majority has a number of implications for the pound, but important questions remain unanswered and so, for now, sterling’s rally may struggle to extend much further.
“The size of the Conservative majority has important implications for Brexit. Boris Johnson now has a wealth of options for dealing with the EU, but the trajectory of trade talks remains a major unknown factor for sterling at the moment. With a stronger hand for dealing with eurosceptic hardliners, Johnson is in a position to offer concessions for a free trade deal, such as the border in the Irish Sea that enabled his withdrawal agreement breakthrough. But a strong majority could prove a double edged sword for sterling as the new Government could decide its majority means it has a strong hand for hardball tactics with the EU.
“Despite questions remaining over future relations with the EU, tonight’s events represent a material reduction in overall uncertainty. This is important for sterling, hence the 3% rally we’ve seen on the night. Despite this, sterling remains well below pre-referendum levels. How far sterling can continue to rally over the next 12 months will depend on how much momentum the economy can regain. This will depend heavily on the behavior of UK businesses, which have choked off investment for much of the past two years. If UK businesses begin to invest again, combined with looser fiscal policy, the economy will enjoy a post-Brexit bump in 2020, enabling sterling to at least get a glimpse of the sunlit uplands of pre-referendum levels.”
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