This Update was originally sent to clients as a Rapid Response immediately after the general election exit poll was published at 10pm on 12th December 2019.
If the exit poll’s estimation that the Conservatives secured a majority of 86 seats in today’s general election is right, then a Brexit deal by 31st January and a loosening in fiscal policy in a Budget in February will provide some support to the economy and the pound. But unless Johnson drops his pledge not to extend the transition period, that boost probably won’t be big enough to prompt interest rate hikes next year or take the pound much above $1.35.
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