Pound steady be­fore elec­tion

The Star Early Edition - - BUSINESS REPORT / INTERNATIONAL - Ritvik Car­valho

STER­LING rose yes­ter­day after drop­ping nearly half a cent against the dol­lar in early Asian trade in re­ac­tion to an­other mil­i­tant at­tack in Lon­don at the week­end, days be­fore a Bri­tish par­lia­men­tary elec­tion. Satur­day’s at­tack – the third in Eng­land in three months – saw ster­ling slip from $1.2893 to $1.2851 at the start of Asian trad­ing.

A dip in an in­dex of ser­vices sec­tor sen­ti­ment had lit­tle im­pact, and ster­ling then jumped into pos­i­tive ter­ri­tory after the lat­est poll from the ICM or­gan­i­sa­tion showed Prime Min­is­ter Theresa May’s Con­ser­va­tives 11 points in front of the Labour op­po­si­tion.

That ran counter to other polls show­ing Thurs­day’s elec­tion race is ex­tremely close, and helped push the pound 0.1 per­cent higher to $1.2907 by 10.20am. It gained 0.3 per­cent to 87.22 pence per euro.

Ster­ling has wob­bled over the past two weeks, with in­vestors’ con­fi­dence that May would se­cure a land­slide ma­jor­ity shaken by opin­ion polls pre­dict­ing a wide range of out­comes for the June 8 snap elec­tion.

Polls have re­sults rang­ing from an in­creased ma­jor­ity for the Con­ser­va­tives to a hung par­lia­ment – wor­ry­ing in­vestors who had bet a land­slide win for May would trans­late into a stronger bar­gain­ing po­si­tion in Bri­tain’s exit talks with the EU, which be­gin on June 19.

“There’s greater two-way risk (to ster­ling). Even if May does just about enough to in­crease the ma­jor­ity – that could still po­ten­tially be ster­ling pos­i­tive,” said ING cur­rency strate­gist Vi­raj Pa­tel.

“The worst case out­come is this grey area of uncer­tainty – the hung par­lia­ment and no sta­ble gov­ern­ment formed by Fri­day or Mon­day – mar­kets will sell off on that.” – Reuters

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.