Sterling hits 12-day high as investors bet on Conservative win
Jun 06 2017 by Johnny Bowman
LONDON, June 6 Sterling hit its highest level in nearly two weeks against the dollar on Tuesday before easing slightly, still buoyed by investors' expectations of victory for the ruling Conservative Party in a general election on Thursday.
The pound has been buffeted over the last two weeks as polls have depicted a tightening race, raising the possibility that Prime Minister Theresa May might not be able to get the increased majority she had hoped.
It has since recovered, though, climbing back above $1.29 on Monday after an ICM poll carried out from June 2 to June 4 showed the Conservatives with an 11 point lead over Labour.
However, other polls show the Tories have a lead of up to 12 points.
"As we move closer to the election the pound is expected to trade in a choppy manner as investors will be reacting to last-minute exit polls with the current range of 1.2800 to 1.2900 capping any short-term price action".
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"Brexit has taught us not to believe polls, and not to take aggressive positions ahead of United Kingdom events".
"There is a very simple rule of thumb: the larger the Conservative majority becomes, the more positive that is for sterling", Adam Cole, head of global foreign exchange strategy at Royal Bank of Canada, said in an interview with Bloomberg Television before the attack.
The pound is rising against the euro this morning, despite election polls showing mixed results.
One-week sterling-dollar implied volatility - a hedge against price swings in the currency - was at 12.5 percent, near its highest levels since January 17, when May set out her Brexit strategy.
"Therefore, political risk is somewhat a limited factor".