Sterling dropped by 0.4 percent against US dollar overnight due to rising fears that the election will result in a hung parliament, with a Tory victory by no means guaranteed. Chris Curtis, YouGov’s Political Research Manager, also urged caution, saying: “Our latest and final poll shows that a small Conservative majority is likely, with the Tories taking 22 more seats than in 2017 and Labour losing 31.
“But the margins are extremely tight and small swings in a small number of seats, perhaps from tactical voting and a continuation of Labour’s recent upward trend, means we can’t currently rule out a hung parliament.”
With just one day to go before the general election, we expect the pound to remain highly volatile as fears of a hung parliament and extended Brexit uncertainty haunt UK markets.
The US dollar is also holding steady against the pound as markets brace for the Federal Open Market Committee’s (FOMC) interest rate decision later today.
The Fed is expected to hold rates at 1.75 percent, but any hints from the Federal Reserve of a rate cut in 2020 would prove USD-negative.
US-China trade developments will also continue to drive the “greenback” today.
Wendy Cutler, former acting deputy US Trade Representative, commented: “Both sides have said that they are very close, but I can tell you as a trade negotiator that the last mile is always the most difficult”.