Pound tumbles amid fears of hung parliament — FX Focus

The pound has whipsawed in recent days, buffeted by different polls and interpretations of what the possible election outcomes might mean for the currency in the long run.

However, there is one potential Tory gain.

After falling 0.5% to a six-week low of $1.2770, sterling has regained ground to be slightly higher at $1.2866.

“Sterling weakness has offered a helpful translational boost for the FTSE’s army of foreign earning stocks as the index brushes off weakness in commodities overnight”, said Henry Croft, a research analyst at Accendo Markets in London. But it’s still near record levels and rose 4.4 per cent in May, its biggest rise since December. It then estimated the number of each type of voter in each constituency.

Using new constituency-by-constituency modelling, the projection by pollsters YouGov said the Conservatives would lose 20 seats to 310, with Labour up 28 to 257. This is a far cry from the nearly unanimous assumption of a Tory majority.

Labour gained three points to reach 39 per cent, while the Lib Dems were on seven per cent and Ukip on four.

Deborah Mattinson, founder of Britain Thinks, tweeted: “YouGov not just at odds with other pollsters but also with their ex top honcho @PeterKellner1 who predicts Con lead 66 seats … fearless stuff”.

The opposition Labour party, led by veteran socialist Jeremy Corbyn, has gradually nibbled away at the Conservative lead in the polls, with the campaign back in full swing after the Manchester terror attack. “We still think the Conservatives are going to win a larger majority”.

The analysis is based on a complex model and suggests Mrs May’s gamble of calling a snap election in the hope of a landslide win could backfire spectacularly.

Experts said the outcome has become harder to predict but that markets are still expecting a Tory win.

Traditional financial market logic favours right-leaning parties who keep a tighter rein on public spending over those like Labour who tend to tax and spend more.

A poll conducted by Survation for ITV’s Good Morning Britain program showed May’s lead had dropped to 6 percentage points from 9 points a week ago and 18 points two weeks ago. Pollsters such as ICM and ComRes, which have the Conservatives’ lead in double digits, share the Conservative candidate’s view of young voters’ motivation. It’s now much more plausible that Labour might be elected, which doesn’t appear to be spooking traders as much as some thought it might.

Moreover, Jeremy Corbyn’s manifesto promise to scrap tuition fees from this Autumn has attracted a surge support from young people.

Most other polls keep the Conservative Party in a commanding lead, but YouGov is claiming to be using a methodology that got the European Union referendum result correct.