Exit polls suggested that Boris Johnson is leading the Conservative party to win a majority of seats in the UK general election.
The official exit poll predicted that the Tories will win 368 of the 650 seats in the House of Commons. A swiping victory will give the prime minister more power to negotiate a Brexit deal and put UK on track to leave the EU by the end of January 2020.
GBP/USD surged over 2.3% or 300 pips overnight, reaching its highest level seen since May 2018. The immediate resistance level seems to be found at 1.350 area.
Christine Lagarde spoke in the European Central Bank meeting as the new chair last night. She painted a slightly brighter economic outlook of the eurozone, while maintaining her predecessor Mario Draghi’s ultra-loose monetary policy. She said ‘the downside risks on the horizon are less pronounced’. This comment is largely in line with recent macroeconomic data observed, which suggests that the global cyclical slowdown will have alleviated and is set to bottom out by Q1 2020. EUR/USD strengthened by 0.38% following the ECB meeting and continued its upward trajectory.
President Trump approved a US-China trade deal to halt the 15 December trade tariffs, on the baseline that Beijing agreed to purchase more US farm goods. The terms have been agreed but the legal text has not yet been finalised. Looking ahead, the market will focus on the details of the phase-one deal and look into structural issues such as intellectual property protection, state subsidies and the opening up of the financial market.
Asian markets are set to open broadly higher, as investors wake up in the morning to many favourable news. Political risk surrounding the UK election and trade risks surrounding the tariff deadline have both been cleared for now. It seems the ‘Santa rally’ came in earlier this year.
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Margaret Yang Yan