With just two days until a general election in the UK, the British pound was mostly unchanged and consolidated recent gains against the Norwegian krone after markets embraced the possibility of a Conservative win.
Boris Johnson’s Conservative Party still has a two-digit lead over Corbyn’s Labours, according to most polls ahead of the election. Johnson’s clear message that he will get Brexit done by January 31st in the case of a Tory Parliament majority seems to have been working for now.
However, as the election day comes closer, the focus is shifting once again to health and the NHS — a field that the Labour Party claims is in crisis after a decade of low investments and spending constraints. This culminated after a reporter tried to show Johnson a picture of a 4-year-old with pneumonia lying on a pile of coats on the floor of a Leeds hospital — a picture Johnson refused to look at and tried to change the subject. The video had been viewed more than 8 million times by Tuesday morning.
Meanwhile, as investors are protecting themselves against the risk of a fall in the British pound using currency options, it becomes increasingly attractive to bet on sterling gains instead on losses.
One-week risk reversals, which are a measure of market sentiment using the relative pricing of put and call options, have become the most bearish since June 2017. It’s now cheaper to bet on the pound rising to $1.34 than to bet on the currency falling to $1.27.
Regarding economic reports, the UK GDP for October will be released at 9:30 a.m. London time with a forecast of 0.1%. Norway releases inflation numbers and CPIs today.
The pound continued to trade at elevated levels against the krone, near multi-year highs. The pair looks well supported by the December 6 low of 11.97 and is overall tilted to the upside. As of 7:05 a.m. London time, one pound bought 12.03 Norwegian krones.