Top Movers

Sterling slides as poll warns of further UK political turmoil

By Abigail Townsend

Date: Wednesday 11 Dec 2019

Sterling slides as poll warns of further UK political turmoil

(Sharecast News) - Sterling came under pressure on Wednesday after a widely-followed opinion poll predicted the Conservatives would win the General Election with a significantly smaller majority than initially expected.
YouGov's final poll ahead of Thursday's election showed the Conservatives winning with a majority of just 28 seats, down from the previous poll that predicted a majority of 68. At the start of campaigning, the majority was expected to be 80.

The prospect of yet more political uncertainty following the election and how that might impact the economy and Brexit, weighed heavily. Sterling lost 0.7% against the dollar, to reach a six-day low of $1.3112, and 0.6% against the euro to €1.1835.

Neil Wilson, chief markets analyst at, said: "Sterling remains highly susceptible to polls and specifically exposed to big downside moves on anything other than a solid Tory majority.

"The central case remains for a Tory majority of 20-30, but we are dealing with the fine margins for error. 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."

JP Morgan told investors: "With less than a day until the polls open, and the prime minister floundering on the NHS in recent days, the prospect of a hung parliament should weigh on sterling today.

"As we've noted from the outset, this is far from a routine UK election and therefore harder than ever to predict. We maintain that is the case and so, while a Tory majority is the most likely outcome still, a long position after a 2% rally in the currency does not seem a favourable risk-reward set up. We prefer to sell rallies in the pound at these levels."

Connor Campbell, financial analyst at Spreadex, noted: "The Tories may be in for a 28-seat butter, one that could potentially make it difficult for Boris Johnson to easily get his own way Brexit-wise. From its previous position of quiet confidence - the kind that saw it spend December hitting multi-month, multi-year highs - sterling took a tumble."

But he added: "Compared to where it was near the end of November however, and the currency is still clearly banking on a blue dawn come Friday morning."

Michael Hewson, chief market analyst at CMC Markets, argued: "The outcome remains still close to call, with the prospect of another hung parliament a real possibility. With the weather forecast looking absolutely lousy for Thursday, with widespread torrential rain, turnout could also be a factor in how the result turns out."

Russ Mould, investment director at AJ Bell, said the poll suggested a hung parliament was "a credible outcome" and that UK-focused stocks were also now under pressure along with sterling.

As at 1015 GMT, the FTSE 250 was down 1% at 20,637.46, while the FTSE 100 was largely flat at 7,208.07.

Special promo:
Trading the Forex Market? Visit to get advanced infomation about currencies and the Foreign Exchange Market.


Email this article to a friend

or share it with one of these popular networks:

Top of Page