Sterling drops as poll shows Conservative lead slipping ahead of U.K. election
The pound came under pressure early Wednesday after a fresh YouGov poll predicted a slimmer-than-expected lead for Prime Minister Boris Johnson’s Conservative Party in a General Election that’s now less than 24 hours away.
Sterling GBPUSD, -0.0380% slipped 0.3% to $1.3124 from a level of $1.3155 seen late Tuesday in North American trading. The FTSE 100 UKX, +0.04% was up 0.4% in early action, benefiting from a weaker pound as many multinational companies listed on the index earn the bulk of their revenue outside the country. The blue-chip index closed down 0.3% to 7,213.75 on Tuesday.
A YouGov MRP poll released late Tuesday projected that the Conservative Party would win 339 seats in Parliament, versus 231 for Labour.
“The previous iteration of the poll showed the Conservatives with a lead of 68 seats so the forecast lead has been cut in half which makes things a little more interesting ahead of the vote tomorrow,” said a team of strategists led by Craig Nichol at Deutsche Bank, in a note to clients.
“Markets for the first time need to worry about a hung parliament and what that might mean in terms of more uncertainty over the economy and Brexit,” Neil Wilson, chief market analyst at Markets.com, told clients. He said a hung parliament resulting from Thursday’s election would push sterling down to $1.27 and pressure U.K.-focused stocks on the FTSE 250 midcap index MCX, -0.44%. That index was trading flat in early action Wednesday.
But sterling pared a deeper loss seen as that poll was released late Tuesday. The pound has gained about 1.5% for the month of December and roughly 6% over the past couple of months as investors have increasingly priced in a victory for Johnson.
Markets expect the Conservatives to push through a deal to exit from the European Union if Johnson’s party wins a majority.
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