Sterling hammered by poll showing risk of hung parliament

Owen Stevens
June 1, 2017

The financial markets had already pulled down the pound from its recent high around 1.305 against the dollar as recent polls suggested that a lead for Theresa May's Conservative Party is diminishing fast, especially after this month's deadly Manchester attack.

The pound to euro rate fell close to 1.144 before recovering to 1.1462.

"Oh come on, whatever your politics and opinion on the polls, it would be objectively hilarious if the result was a hung parliament", commentator Ellie Mae O'Hagan wrote on Twitter.

A YOUGOV analysis has suggested the United Kingdom faces a hung parliament.

The Times said the YouGov data suggests the Tories could lose up to 20 of the 330 seats they held in the last parliament, with Labour gaining almost 30 seats.

Other recent polls such as ComRes and ICM have suggested Labour would gain some ground on the Conservatives, but the Tories would prevail and maintain a majority.

Other projections still show May would win soundly though the YouGov poll was the latest hit to markets which just two weeks ago were pricing in a Conservative landslide.

"Recently we've been relatively agnostic about sterling, but have now chose to underweight the currency for the next couple of weeks, in case the depreciation accelerates", Cosimo Marasciulo, head of European fixed-income at Pioneer Investments, said in emailed comments.

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However, one must consider that in a small time span it is very hard to correctly predict the outcome as the snap election was called only in April. He said if Brussels was watching, would the European Union think that she is a " blowhard who collapses at the first sign of gunfire".

Sterling slumped to an intraday low of $1.2770-the lowest since mid-April-after a projection from a polling company indicated the Tories could lose its parliamentary majority in the vote next week.

If May fails to win an overall majority, she would be forced to strike a deal with another party to continue governing either as a coalition or a minority government.

The seat range for the Tories is 274 to 345, with the central estimate being 310 seats - down from the 330 they had before the snap election campaign.

Shakespeare said the figures could change dramatically before June 8.

The model was based on 50,000 interviews conducted over a week and allowed YouGov to assess the intention of every type of voter, from where they live to how they voted on Brexit, their age and social background, in order to weight the results.

But YouGov acknowledged that models could not produce estimates as accurate as a full-scale poll in each constituency.

Other reports by VgToday

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