The pound strengthened on Thursday after a poll indicated Prime Minister Boris Johnson’s Conservative Party will win the December 12 general election with a comfortable majority.
Sterling GBPUSD, +0.0387% rose 0.1% to $1.2933 from a level of $1.2920 late on Wednesday in New York.
The FTSE 100 index UKX, -0.18% fell 0.4% to 7,398.89 on pound strength and as China reacted angrily to news that President Donald Trump signed a bill supporting Hong Kong protesters. That has stoked some concerns that trade negotiations could become more complicated, and global markets are weaker across the board on Thursday.
A Thanksgiving holiday in the U.S. is also expected to keep trading volumes thin for financial markets.
A YouGov poll for the Times predicted the Conservatives would win 359 seats, Labour 211, the Scottish National Party 43 and the Liberal Democrats 13 if the election were held now. The result would mean a 68-seat majority for Johnson. The poll indicates the second-worst postwar loss for the Labour Party.
“If it turns out to be right, Prime Minister Boris Johnson will be able to pass his Brexit deal before Christmas without too many problems. Friday 20 December has circulated as a potential voting day,” Mikael Olai Milhøj, senior analyst at Danske Bank, told clients in a note.
“As we do not have much else to rely on, a Conservative majority is now our base case,” he said, adding that they expect Johnson to deliver Brexit by January 31.
In 2017, this same YouGov poll was a bit of an “outlier,” yet proved to be remarkably accurate, Michael Hewson, chief market analyst at CMC Markets, told clients in a note.
“It predicted a hung parliament when no other poll was,” he added. “It is, however, only one poll, and when one looks at the internals of the data it wouldn’t take that much of a shift in some key marginals for that majority to come down sharply.”
As for stocks on the move, pharmaceutical names led the loses, while mining stocks rose.
Property companies Land Securities Group LAND, +2.92% and British Land Company BLND, +1.36% rose 2.8% and 1.2%, respectively, after a survey from Nationwide Building Society showed annual house price growth in November grew at the fastest pace since April, up 0.8%.
Away from the main index, shares of Virgin Money U.K. (VMUK) VMUK, +18.88% soared 13% after the financial services group results came in slightly better than expected. “Fundamentally we believe it is still undervalued—with benefits (revenue and costs) from the VMUK integration yet to flow,” said a team of analysts led by John Cronin at Goodbody.