Hope for a soft Brexit
British pound plunges after poll
The British pound fell against the dollar and the euro on Wednesday 31 May. This was due to a publication of the poll that suggested the UK election is ending in a stalemate. No party would aim for an absolute majority in parliament. That reports Business Insider.
British newspaper The Times reports that a YouGov poll suggests Prime Minister Theresa May's Conservative Party could lose 20 seats and Labor gain 30.
Too short of seats
Such a result would leave the Conservatives 16 seats short of a majority in the House of Commons. The threshold for this is 326 seats. No party could rule independently.
The Times acknowledges that the YouGov poll's margin of error is "significant". "The Tories could just as easily end up with 345 seats, 15 more than the current number of seats." YouGov itself also acknowledges that the forecast is "controversial".
Decline of the British Pound
Despite these ifs and buts, the British pound reacted immediately after the poll was released on Wednesday. The British currency fell against the euro and the dollar. This is what the picture looked like against the dollar:
Analyst Michael Hewson, of CMC Markets, emailed on Wednesday that the prospect of a so-called 'hung parliament' has strengthened. This is how the picture was against the euro:
Hope for a soft Brexit
Jordan Rochester, of Nomura, said an above-average Labor outcome could also benefit the British pound in the longer term: "Once the dust settles, hopes for a 'softer' Brexit are back and so can the British pound." positively influence.'
Rochester does add: 'We are talking about an endgame where Labor wins. In the case of a parliament where no one has a majority, you then have to deal with all kinds of risks with regard to coalition formation.'
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