YouGov modeling comes up with a hung parliament after next week's ballot
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The British pound came under fresh pressure on Wednesday, after a projection from a polling company indicated U.K. Prime Minister Theresa May's Conservative Party could lose its parliamentary majority in the June 8 general election.
Just one week before voters go to the polls, YouGov research for The Times (https://www.thetimes.co.uk/article/latest-general-election-poll-predicts-conservatives-will-lose-seats-02zfwl8lc) showed the Conservatives might lose 20 seats in parliament, with Labour gaining 28 seats. May's party needs 326 to govern, therefore the loss of those seats would mean a hung parliament.
The pound dropped to $1.2805 from $1.2860 late Tuesday, when it managed to recover from much weaker levels earlier in that session. Sterling took a hit on Friday after a separate YouGov/Times poll showed the lead for the ruling Conservative party cut to 5 percentage points.
Against the euro , the pound fell to EUR1.14520 from EUR1.1496, and against the , it slid to Yen142.03, from Yen142.54
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The YouGov modeling has created "uncertainty the market doesn't like," said Neil Wilson,senior market analyst at ETX Capital. He added that the pound is now trading around last Friday's lows, when traders first started to worry about how the Conservatives would fare in the election.
At the $1.28 level, the pound is trading a couple of cents above where it was just before May called for an election on April 18 (http://www.marketwatch.com/story/uk-adds-another-layer-of-complexity-analysts-react-to-surprise-snap-election-call-2017-04-18), the analyst said, in a note.
Opinion:May will win the U.K. general election -- and catapult stocks and the pound (http://www.marketwatch.com/story/theresa-may-will-win-the-british-general-election-and-catapult-stocks-and-the-pound-2017-05-24)
Calling a hung parliament a "nightmare scenario for May," Wilson said the failure to secure a majority could trigger a leadership contest for the Conservative Party. May could then be out as prime minister and a more hard-line Brexit supporter put in charge.
In addition, a parliament where no party has a majority could give a boost to Jeremy Corbyn, leader of the opposition Labour Party. There has been a push during the election campaign to create a progressive coalition against the Tories.
"A hung parliament could easily see Jeremy Corbyn become prime minister -- investors simply wouldn't know where they stood," Wilson said.
Elsewhere, the dollar inched up against the yen to Yen110.88, from Yen110.84 late Tuesday.
The euro was steady ahead of fresh data on inflation in the eurozone, due at 5 a.m. Eastern Time. The shared currency was trading at $1.1194, from $1.1187 late Tuesday. It has strengthened recently as the dollar has weakened on worries that U.S. President Donald Trump may have trouble pushing through policies aimed at stimulating U.S. economic growth.
Read:'Euro-dollar parity is dead,' say analysts (http://www.marketwatch.com/story/euro-dollar-parity-is-dead-say-analysts-2017-05-30)
Investors in the U.S. will be looking ahead to data in a busy week that finishes with nonfarm payrolls for May. On Wednesday, the Chicago purchasing managers index is coming at 9:45 a.m. Eastern Time, followed by pending-home sales for April at 10 a.m. Eastern and the Federal Reserve's Beige Book at 2 p.m. Eastern.
(END) Dow Jones Newswires
May 31, 2017 04:21 ET (08:21 GMT)