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British Pound Falls Ahead Of Next Week's Election

British Pound Falls Ahead Of Next Week's Election

The British pound fell on Wednesday and is trading a near a one-month low of $1.2775 amid political uncertainty across the pond.

U.K. Prime Minister Theresa May shocked the political landscape in April when she called for an early election in June 2017. May's Conservative party holds a majority of seats in the U.K. parliament, which means fixed election laws dictate an election isn't required until 2020.

At that time, a YouGov poll pointed toward another Conservative majority. Some political experts even said the Conservative's main opposition, the Labour party, is showing "brutal" numbers.

Not So Fast

However, a new YouGov poll on Wednesday showed a reverse in sentiment, and the Conservatives are now projected to lose as much as 16 seats. If this were to be the voting outcome, the Conservative party would rule with a minority government.

A CNBC report noted the Conservatives has fallen out of favor with the public amid announcements of unpopular education and social care plans. At the same time, the Labour party is gaining traction among center-left and liberal democrat voters.

A minority government could also force the Conservatives to take a softer approach to the ongoing Brexit talks.

"The near-term risks to sterling remain heavily tilted to the downside," Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics, was quoted by CNBC as saying in a research note on Tuesday. "Sterling is about 2 percent higher than when the election was called suggesting markets remain positioned for a big Tory (Conservative party) win that — in theory — would strengthen May's hands in Brexit talks."

Related Links:

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