The pound had a record fall since January after a poll showed the Tory-Labour gap narrowing to just 5%, from more than 20% just a few weeks ago. General elections take place in the United Kingdom in just twelve days’ time – 8th June. A YouGov poll, the first one since the Manchester terrorist attack on 22 May, 2017, which killed 23 adults and children and injured over 100 people, places the Tories (Conservatives) at 43% and Labour at 38%.
The British pound declined against all the major currencies; falling by over one percentage point against the US dollar – now two cents below last week’s six-month high. The other major currencies are the US dollar, Canadian dollar, euro, yen, Swiss franc, Australian dollar, and Swedish Kronor.
By 4.30pm GMT on Friday, the pound had fallen 1% to 87.15 pence per euro, and (also fallen) 1.2% against the US dollar to $1.2785. Friday saw the UK currency’s largest one-day fall since 18th January, 2017.
The question in this YouGov poll was: “Do you have a favourable or unfavourable opinon of the following…?” Did Theresa May overestimate Tory popularity? Might calling an election be the biggest mistake in her political life? (Image: adapted from YouGov)
Even though the FTSE share index hit a record high while other major stock markets in Europe failed, the UK rise was only half a percent. The FTSE share index rose for the fifth successive week.
Pound falls when gap narrows
The moment Prime Minister Theresa May called an election last month, everybody was convinced that the Tories (Conservatives) would win by a huge margin, thus strengthening her hand in negotiations with Brussels and the other European Union member states on the UK’s departure from the trading bloc. Everybody was convinced except for the conservative election strategist Lynton Crosby who warned that calling a snap election was risky, according to a leaked memo.
On the day she called an election, and for the next few weeks, the pound rose steadily. All predictions were for a massive Tory majority in parliament and total meltdown for the Labour party with Jeremy Corbyn at the helm.
The latest poll shows that the Tories’ lead over Labour is just one quarter of what they were one month ago.
If this poll is an accurate reflection of British voting intentions, the Labour party is definitely not in meltdown mode. However, British pollsters have become notoriously inaccurate – their predictions for the In-or-Out EU Referendum and the last General Election were completely wrong. (Image: adapted from YouGov)
Are we heading for a Labour win?
Rather than strengthening her hand, it is starting to look more likely that Prime Minister May could end up with an even slimmer majority than she currently has, or even a hung parliament. In fact, if the pendulum continues swinging the way it is for the next twelve days, the Tories could be out.
Reuters quoted Nomura strategist Jordan Rochester, who said:
“Sterling is likely to continue to be under pressure now until the election is out of the way, if polling continues to indicate it’s a tighter race. For the market the worst outcome is if we have further uncertainty with the chances of a hung parliament.”
YouGov, an international, Internet-based market research firm, based in the UK, says that its latest polling shows that the Conservatives appear to have lost support following the Manchester terrorist attack. It also warns that the numbers must be placed in a chronological context.
The latest Tory-Labour gap – 43% to 38% respectively – is half of what it was according to a Sunday Times poll last weekend, which reported a 10% gap – 44% to 35%.
YouGov wrote:
“On the face of it, the latest numbers appear to suggest that the Conservatives have lost support in the wake of the Manchester atrocity. However, given the many big events of the past week, it is vital to put the latest figures in some chronological context.”
“The first thing to bear in mind is that our previous Sunday Times poll was carried out on Thursday and Friday last week. This was just after the Conservatives launched their manifesto but before the big weekend furore about the “dementia tax” and the subsequent change in policy, which took place on Monday.”
Video – Pound suffers as polls narrow
This IG UK video reports that the IG digital 100 is showing an even smaller margin for the Tories. According to Robert Oulds, from the Bruges Group, the Conservatives should be able to expand on their current majority.
Forecasters are no longer talking about how huge the Tory majority will be, but rather on whether it will be larger than it currently is.