While the beginning of December is usually a calmer time for traders and bookies, as holidays are coming, this year is an exception. As we go into the long British election night, so do traders and markets. It is Thursday night, December 12th, and as the fate of the UK is being voted, traders are working hard tonight to catch the “right wave” ahead of the final outcome.
According to Reuters, major international banks such as HSBC and Barclays are deploying additional staff tonight across the globe (London, New York, Singapore, Honk Kong) so as to better cater clients’ needs and questions along the British election night.
The UK is facing its first December election night in a century, and Brexit is a serious “phenomenon” to be taken into consideration, so bankers and traders are all ears to hear what happens next and how global markets will be shaken.
The most recent polls indicate that the likely winner of tonight’s election will be Boris Johnson’s Conservative Party. However, opinion polls are not to be 100% trusted, as we have seen in many countries, especially in the US (Hillary Clinton – Donald Trump elections).
The opposing parties, which cater to less pro-Brexit and pro-business tastes, may show significant strength especially if the public opinion continues its very recent move.
The issue is that the Conservative Party is going to try to swiftly split from the European Union. The opposing party is currently leaning towards one more referendum on the EU membership. While such a move can turn out to have positive impact on the sterling, the policies by Corbyn to nationalize certain parts of the economy may cast uncertainty in the global markets, as Brexit will be further delayed.
Apart from the political uncertainty, London is currently the largest centre for the $6.6 trillion daily foreign FX markets, as noted by Reuters, and the largest hub for the secondary bond market trading. So, the magnitude of this position explains why traders and bankers are all up and working to see what will happen as the night progresses.
British mid-cap stocks that are characterized by significant exposure to the domestic market had increased by more than 7% since October 2019, while the British pound keeps on climbing.
The exit polls today will begin some time around 22:00 GMT after all voting closes. After that, the official results will come in.
One thing is sure: tonight’s elections will show if the UK is ready to leave the EU and how markets will respond to the new ruling party.