Pound slides on eve of UK election

The British pound slid Wednesday on the eve of a UK general election, as a fresh poll predicted Prime Minister Boris Johnson’s ruling Conservatives would win a much smaller majority than previously forecast.

Sterling fell sharply early on before recouping some losses to show a loss of 0.1 percent against the dollar heading towards midday and was on the back foot versus the euro as well.

Pre-election jitters also weighed on the British capital’s FTSE 100 index of blue-chip companies, which was down 0.2 percent as caution prevailed.

“Sterling dropped sharply in early trade following the release of the latest YouGov poll which shows that the Tories’ lead is receding,” said analyst Fiona Cincotta at trading firm City Index.

The key poll released late Tuesday showed Johnson’s lead over veteran socialist Jeremy Corbyn’sLabour party ebbing away.

“The highly-regarded poll shows that the Conservative advantage has slipped. This is the poll that correctly predicted a hung parliament in 2017 — and indicates that the scenario could repeat itself,” added Cincotta.

The YouGov opinion poll said the Tories would win Thursday’s vote, with a majority of 28 seats, sharply down from the 68 forecasts in a similar study at the end of November.

Sterling has surged in recent weeks — sitting at an eight-month high against the greenback and a two-and-a-half-year peak against the euro — on expectations, Johnson would win a big enough majority to push through his Brexit deal.

However, the narrowing polls point to the possibility of another hung parliament — which would lead to more uncertainty in Westminster and drag out the Britain-EU saga even longer.

“There’s a bit of a waiting mode at the moment,” Oanda analyst Craig Erlam told AFP.

“There’s probably too much optimism in the market right now, a bit of complacency even.”