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Dec. 5, 2019, 10:41 a.m. EST

If the sterling rally fizzles, this chart could be a key reason why

Surge in registration of younger U.K. voters

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By Steve Goldstein, MarketWatch


Getty Images
British Prime Minister Boris Johnson (L) and main opposition Labour Party leader Jeremy Corbyn

The British pound has been on a roll of late, climbing against both the dollar /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.2844%   and the euro /zigman2/quotes/210561278/realtime/sampled GBPEUR +0.3156%   on expectations the Conservative party will secure a majority in the Dec. 12 general election.

The pound on Thursday reached a fresh five-month high against the U.S. dollar.

With a majority in Parliament, Prime Minister Boris Johnson intends to pass a withdrawal agreement bill to exit the European Union. Johnson would then have to negotiate a trade deal with the E.U.

Related: Pound could hit $1.35 if Conservatives win and Brexit pact reached, UBS says

Virtually every pre-election poll has the Conservatives with a bigger lead than is necessary to secure a majority in the Parliament. The general consensus is that a victory by 6 or 7 percentage points is needed for Conservatives to escape a so-called hung Parliament.

Of the major polls, only one, from ICM Research, shows the Conservatives with a 7-point lead. More typical is the poll from YouGov showing the Conservatives with a 9-point lead.

If sterling traders are making a mistake, however, it will be because of this chart.

Put together by Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics, it shows a surge in voter registrations.

About two-thirds of those registrations been made by those under the age of 35 , who are far more likely to vote Labour. In 2017, first-time voters aged 18 and 19 favored Labour by 47 percentage points, according to YouGov.

/zigman2/quotes/210561263/realtime/sampled
US : Tullett Prebon
1.3046
+0.0037 +0.2844%
Volume: 0.0000
Jan. 21, 2020 3:23p
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/zigman2/quotes/210561278/realtime/sampled
US : Tullett Prebon
1.1762
+0.0037 +0.3156%
Volume: 0.0000
Jan. 21, 2020 3:23p
loading...

Steve Goldstein is MarketWatch markets editor for Europe. Follow him on Twitter: @MKTWgoldstein.

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