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Pound briefly touches 31-month high while Tullow oil falls 70 per cent in a day

By Marianne Curphey

The prospect of a Conservative majority in Thursday’s UK General Election pushed sterling higher against the US dollar

Monday’s markets saw the pound rise strongly against the Euro in early trading to touch €1.19 for a time. Sterling was buoyed by anticipation that the Conservative government will gain an overall majority in Thursday’s General Election in the UK.

Later, the pound slipped back a little with an intraday trading value of €1.1879. Sterling also continued to perform well against the US dollar, climbing to $1.3154 at the close of UK markets, although still short of its seven-month high of $1.3349.

Fears of a hung parliament are receding, and opinion polls predicting that Boris Johnson will continue to be UK Prime Minister after Thursday 12 December has been lifting the pound to levels not seen since May 2017.

Reports suggested that hedge funds who had bet on sterling against the dollar had been reducing their net short positions as a result.

Some analysts are suggesting that if Boris Johnson wins on Thursday, the pound could go as high as $1.35 – an exchange rate last seen in May 2018. Peter Kinsella, Global Head of Forex Strategy at UBP, issued a note that was particularly bullish on sterling, suggesting that a long-term level of $1.37 was possible, and $1.45 quite likely.

“Liquidity tends to be quite poor in December, so any general election induced GBP/USD up move could be quite aggressive and take the market by surprise,” he said. “A move to levels of around 1.35 or even 1.37 is entirely feasible. Over the longer term, we think GBP/USD can rise to levels of around 1.40 or even 1.45.”

Elsewhere in Europe, German exports rose by 1.2 per cent in October, beating forecasts of a 0.7 per cent decline, while imports remained flat. It was not enough to lift the DAX, which fell by 0.46 per cent to close at 13,105.61. In Paris the CAC 40 closed down 0.59 per cent, at 5,837.25.

In the UK, the FTSE 100 index closed down 0.08 per cent, at 7,233.90, while the FTSE 250 dropped 10.39 points to 20,922.64, with Tullow Oil its biggest faller.

The oil producer saw its shares drop from 141.40, the day’s previous close, to open at 80.00 and finish a torrid day hovering around 40.00, a fall of 71 per cent. The stock suffered from negative investor sentiment after it announced its CEO and exploration director had both resigned, it had suspended its dividend, warned that its oil production from Ghana will come in lower than predicted.

Bitcoin at intra day trading was 5,704.04, a fall of 0.9 per cent from the start of the day.

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