The U.K. election is becoming a hot topic for investors nowadays. The lead of the Conservative Party versus their rival, Labour Party, has been reduced to 5 points after a poll on Friday. The narrowing of points happened with just a few weeks.
Experts are admitting that such reduction puts the pound in the trouble zone as the market would not be in favor of that. It is known that sterling is connected to anything related to the Tory majority.
Recent survey reveals that even the consumer confidence kept falling and has not yet recovered since the last Brexit. The latest Manchester attack (killing 22 people) also contributed to the souring of the pound. The U.K. terror threat remains to be at a critical level until now and the country is still on high alert for any impending attacks. The sterling is losing more than half versus the euro and the dollar.
However, the dropping of the lead was more likely to have been triggered by May’s announcement on ditching policies for elderly care. The previous surveys showed a different story since Prime Minister Theresa May was able to sustain a lead beyond 10 points.
If May loses seats in the House of Commons, it can cause a sell-off in the pound, as per market experts. Today, the pound plummeted by 0.6 percent to $1.2872. It’s lowest in two weeks was at $1.2845.
Indeed, the pound is in massive pressure right now as a tighter race is becoming evident just a few weeks left before the elections. Analysts are even afraid that a hung parliament (a state or condition where no particular political party has an absolute advantage or majority of seats in the government) might happen, and such is the worst outcome of all.
In the Asian markets, stop-loss orders of the sterling were prompted by traders. A recent telegraph report regarding a succession of the Manchester suicide bombing attack has also contributed to the pressure of selling the pound.
Since the attack, politicians have now resumed their nationwide campaign activities as the June 8 election is fast approaching.
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