Adrian Lowery for Thisismoney.co.uk

The pound wobbled against the euro today after a shock poll showed that a hung parliament is possible after next week’s General Election.

The Conservatives could lose 20 of their 330 seats while Labour at the best could gain nearly 30 MPs, if the latest poll by YouGov for The Times is to be given credence.

That prompted a sell-off of sterling by currency traders, who generally dislike hung parliaments as they threaten economic uncertainty and compromise policy-making.

The YouGov findings contradicts other surveys during the campaign so far, suggesting Theresa May faces losing her majority rather than extending it.

The YouGov findings contradicts other surveys during the campaign so far, suggesting Theresa May faces losing her majority rather than extending it.

The YouGov findings contradicts other surveys during the campaign so far, suggesting Theresa May faces losing her majority rather than extending it.

The pound fell by more than a euro cent from a peak of €1.154 at the open of London trading to €1.143. Against the dollar it dropped only half a cent from $1.282 to $1.277 but later recovered to $1.285.

Sterling had made gains up to this month to a ten month high of nearly €1.20 and an eight-month high of more than $1.30 as traders bet on a firm win and a stronger mandate for Theresa May’s Government.

But some policy stutters from the Tories, a narrowing in their poll leads, mixed economic data and some caution about the UK’s economic prospects emerging in the bond markets have seen the pound slip sharply.

The poll used new ‘constituency-by-constituency’ modelling and is based on 50,000 interviews over a week, with voters from a panel brought together by YouGov. The Times admitted it had a wide margin for error. 

The pound fell by a cent against the euro to below €1.145.

The pound fell by a cent against the euro to below €1.145.

The pound fell by a cent against the euro to below €1.145.

Against the dollar sterling fell by half a cent to below $1.28.

Against the dollar sterling fell by half a cent to below $1.28.

Against the dollar sterling fell by half a cent to below $1.28.

But fund manager Matt Brennan at Brown Shipley said that although the poll is controversial ‘even on a “good night” it only expects the Tories to get 345 seats, a majority of just 20 and a long way short from the expected majority of 100+ just a couple of weeks ago’.

‘A hung parliament would represent a weak government (as we experienced in 2010-15) where it is hard to get policy through,’ he added.

‘This would in no doubt leave the UK in a much worse position for Brexit negotiations, and this is starting to be reflected in both the currency and bond markets – the 10 year gilt briefly moved below 1% (settling at 1.01% this morning), sterling is almost 2% below its recent $1.305 peak and down almost 4% against the euro in May.’

 

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