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GBP v Euro: Pound recovers after YouGov poll hinting at hung parliament | City & Business | Finance

GBP v Euro: Pound recovers after YouGov poll hinting at hung parliament | City & Business | Finance 811339 1

The pound has been unsettled by the latest YouGov poll, which gives its first seat-by-seat projection of the final voting figures.

According to the data, the Conservatives are set to lose 20 seats, leaving them 16 short of a majority.

Labour is expected to climb from 229 to 257, while the SNP will gain an additional four and the Liberal Democrats an extra one seat.

The Greens are expected to retain their single seat, while UKIP is predicted to lose its only spot on the benches of the Commons.

Theresa May had called the snap election to capitalise on the Conservative Party’s strong lead over Labour in the polls, with many political commentators predicting a landslide victory for the Prime Minister.

The latest poll has therefore come as a shock, with the potential for a hung Parliament casting serious doubts over the likelihood of a smooth Brexit process.

Societe General’s Kit Juckes responded to the data by saying; “We’re supposed to treat polls with suspicion but needless to say, we remain bullish of EUR/GBP even if I’ve lost my bet that it would trade above 0.90 by the start of this week”.

This has overshadowed positive consumer confidence figures from GfK, whose sentiment index for May shows the UK public are becoming less pessimistic.

Analysts had expected the index to weaken from -7 to -8, but instead it improved to -5; a four-month high.

Households remained downbeat on the outlook for the economy however, while a separate survey compiled by the British Retail Consortium (BRC) revealed the slowest monthly decline in shop prices since 2013.

Food prices, which are more volatile than other goods, began to rise, which could indicate that the inflationary effects of weak GBP exchange rates have not yet entirely filtered through to the consumer.

Joe Staton, GfK Head of Market Dynamics, commented; “Perhaps the real squeeze in living standards is yet to hit home”.

Sterling weakness has allowed the soft euro to capitalise, despite this morning’s rather lacklustre German economic data.

Retail sales declined -0.2 per cent on the month instead of growing 0.4 per cent, meaning year-on-year transactions shrank by -0.9 per cent against predictions of 2.2 per cent growth.

May’s unemployment change figure shows that 9,000 fewer people were out of work, but economists had expected a drop of -15,000.

However, this was still sufficient to push the seasonally-adjusted unemployment rate down ten basis points to 5.7 per cent.

Political concerns are likely to overshadow the UK consumer credit and mortgage approvals data, while speeches from German Chancellor Angela Merkel and European Central Bank (ECB) Executive Board member Sabine Lautenschläger could fuel further euro movement.

Source : EXPRESS

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