Talking Points
- Sterling gives back some of its recent gains as polls show election may be a very close-run race.
- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for the week on the DailyFX Webinar Calendar.
As the UK General Election race enters the back straight, GBP is looking increasingly under pressure as some polls point to a very close result. A win for the ruling Conservative party, with a 50+ seat margin, would help push GBP back above 1.3050 and potentially higher, while a hung Parliament or a Labour coalition would send Sterling spinning lower.
The latest polls of voting intentions in the UK election point to two very different outcomes. The latest Survation poll for Good Morning Britain put the Tories on 41.5% and Labour on 40.4%, down from a 6% advantage for the ruling party a week ago. On the other side of the trade, the last ICM poll had the Conservatives with an 11% lead - 45% to 34% - over Labour, a 1% narrowing from a week ago.
And while the differential is so wide, and the potential for a hung parliament real, GBP has started to move lower. Against a weak USD, the British Pound has traded back below 1.29000 and any further narrowing of the gap between the two parties could see the recent low of 1.27564 (April 21) under pressure. Below here a gap remains on the charts down to around the 1.2500 level. And below here, in case of a very poor showing by the ruling party, a break below the 1.1800 spike low made in early October 2016 would usher in multi-decades lows and reams of negative headlines. On the upside a break above the current ceiling at 1.30500 could see last June’s 1.35400 ‘high’ tested.
Chart: GBP/USD Weekly Timeframe (August 3, 2016 – June 6, 2017)
If you are looking for more pre-UK election set-ups and real-time views, sign up to DailyFX senior currency strategist Chris Vecchio’s Webinar on Wednesday at 1000 GMT Here
Upcoming GBPEvent Risk
| Events | Date, Time (GMT) | Forecast | Previous |
|---|---|---|---|
| GBP UK Parliamentary Elections | June 8, 0600 | ||
| GBP Industrial Production (Y-o-Y) (APR) | June 9, 0830 | -0.3% | 2.4% |
| GBP NIESR UK GDP Estimate (May) | June 9, 1200 | 0.2% | |
Markets
| Index / Exchange Rate | Change (Exchange Hours/GMT Session Rollover) | Market Close/Last |
|---|---|---|
| FTSE 100 | -0.07% | 7,522 |
| DAX | -0.78% | 12,713 |
| GBP/USD | -0.12% | 1.28877 |
| EUR/USD | 0.15% | 1.12701 |
| EUR/GBP | 0.26% | 0.87445 |
--- Written by Nick Cawley, Analyst
To contact Nick, email him at nicholas.cawley@ig.com
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