Pound hits seven-month high as traders bank on Conservative election victory

THE pound has soared to a seven-month high today as hopeful traders raise their expectations for a Conservative majority in December's election.

At its peak, sterling shot up by 0.5 per cent against the euro and dollar to €1.1791 and $1.3056, the strongest its been since May.

Now might be a good time to trade in your holiday cash - you'll get more foreign currency for your money while the pound is strong.

It means that today, £100 will get you €117.91 or $130.56, meanwhile £500 will get you €589.55 or $652.80.

It's believed that a Tory majority would remove some of the political uncertainty that's held the country back over the past few years amid Brexit woes.

Investors have also welcomed the prospect of Britain avoiding another hung parliament, which would create political havoc.

Many believe that a majority government led by Boris Johnson would do more good for the pound by providing a decisive break from the European Union.

Johnson has promised to take Britain out of the EU by January 31, while Labour has vowed to push for a second referendum on departure.

"The market continues to cut back on sterling short portfolios and hedges in expectation of certainty derived from single party majority expectations," said Neil Jones, from FX hedge fund sales at Mizuho bank.

Jeremy Corbyn's plans for nationalisation has also worried investors because of a black hole in his party's funding calculations.

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Sterling has soared since October, gaining 6 per cent in the last two months, when the prospect of a disorderly no-deal Brexit was delayed after the EU granted Britain another extension.

Investors have since latched on to the prospect of Britain avoiding a hung parliament.

But the pound isn't guaranteed to stay at a high - investors could grow more cautious as the election approaches and the outcome stills hangs in the balance.

The pound has never recovered from the highs that it was before the EU referendum in 2016, when it plunged to a 31-year low.

Its worth is often influenced by political decisions. For example, sterling slumped in mid-October when Brexit talks hit a "standstill".

But it shot up again after MPs were due to vote on a trade deal negotiated by Boris Johnson with the EU.