What time can we expect the election result on Friday?

Voting closes at 10pm on Thursday evening, with the first exit polls to be released soon after. The Ipsos MORI exit poll at the 2017 election predicted within 5 seats for both the Conservatives and Labour, so its release is likely to be closely watched by investors.

The results from the first few constituencies are expected to filter through from around midnight. According to the Press Association, the estimated timings for the votes to be counted are as follows:

• 33% of votes counted by 2:30AM
• 50% by 3:00AM
• 80% by 4:00AM
• 90% by 4:45AM

Using the 2017 timings as a guide, YouGov’s MRP model suggests that around two-thirds of the near 40 swing seats targeted by the Tories will be released by 3AM. This means that we may know earlier than usual if Johnson is heading for a majority. Should the Conservatives not have a clear lead by 3AM, then the chances of a hung parliament would increase and sterling would likely sell-off.

Will Lagarde maintain the status quo on Thursday?

Both the European Central Bank and Federal Reserve will also be meeting this week, ensuring that the lead up to the Christmas period will be a particularly busy one.

We don’t expect too much in the way of major headlines out of either, although both have been known to spring a surprise or two in the past. New ECB President Lagarde is likely to reiterate much of the same as her predecessor Draghi on Thursday, particularly if her recent comments are anything to go by. She is likely to maintain the status quo, talking up the need for fiscal stimulus and keeping options open for an increase in monetary easing. While recent data has taken a turn for the better in the Eurozone, the bloc is far from out of the woods yet, so the tone is likely to remain a dovish one.

Fed to hold rates, Trump announcement eyed

In the lead up to Thursday, the Federal Reserve will be meeting on Wednesday evening. Rates are almost certain to be kept unchanged following the recent uptick in US data, particularly out of the labour market. The key will instead be the tone of communications and whether this suggests the Fed is indeed done cutting rates, or is keeping its options open for another cut at some point in 2020.

Probably of more significance will be news on the trade front, with just five days to go until President Trump’s tariffs on Chinese imports are set to take effect. We expect Trump to postpone the pending tariffs, although this announcement may come after market close on Friday. Providing the tariffs are postponed, we would likely see a sharp rally in USD/JPY and move higher in most emerging market currencies.