Cable dropped 50 pips in quick fashion as election jitters creep in
In the bigger picture, the drop is still relatively minimal considering price action we have seen since last week and even more so if you want to weigh it against the October move.
As mentioned in the earlier post, it could be a bit of a delayed reaction to some swings in the odds of the betting markets - these tend to be very volatile during election days.
One example is that Betfair is now putting a Conservative majority at just 65% from 80% a few days ago. Meanwhile, its probability of a hung parliament outcome shot up to 32%, the highest since 21 November.
But the pound reaction could also be due to some positional adjustment as traders do some last-minute tinkering after speaking to people and "getting a feel" about sentiment on the ground and at the polling stations.
After all, it is the election and these are the risks that come with it. But as mentioned, in the bigger picture, focus on the exit poll and the results. In the meantime, it's pretty much the wild west out there so if you fancy getting shot, you know where to go.
Be sure to stay up-to-date about the election and if you missed out on our earlier previews and thoughts about the pound and the election itself, you can head over here.
