Labour win could see pound plunge

THE pound could crash to $1.20 if Labour wins the general election, traders have warned.

City insiders believe a 5pc fall is likely if Labour leader Jeremy Corbyn becomes prime minister, taking its value down to levels not seen since January. Against the euro it could drop as low as €1.08 – its worst showing since the financial crisis.

While a Labour victory remains unlikely, polls have narrowed in the past few days. One that placed the Tories only five points ahead on Thursday was enough to send the pound down 1.2pc to a monthly low of under $1.28.

Adam Cole of RBC Capital Markets said the City would be badly shaken by a Corbyn win.

‘It is pretty clear the response would be negative. I would say a knee-jerk sell-off of 5pc or more,’ he told the Sunday Telegraph.

It was also predicted that a Corbyn victory would plunge Brexit negotiations with the European Union into chaos.