Sterling rose against the euro as the British currency recovered from previous losses after the third UK election opinion poll was released on Wednesday. In yet another blow to Boris Johnson’s Conservatives, YouGov revealed the party’s lead over Jeremy Corbyn’s Labour narrowed to 11 points. Added to this, reports revealed there was a surge in under-35s registering to vote before last night’s deadline, with the expectation that many of that demographic may vote Labour.
Commenting on the election risks, Commerzbank’s FX strategist, Thu Lan Nguyen said: “So far, the market has been relatively complacent when it comes to the risks ahead. Yes, the Tories still have the lead but they’re certainly not gaining.
“The focus will be increasingly on the polls now. Any surprise or any big move in any kind of direction, I think, will certainly become bigger the closer the elections are.”
Looking ahead to this evening, YouGov is expected to release seat-by-seat predictions for December’s election, which could spark Sterling movement.
Commenting on this, RBC Capital Markets’ chief currency strategist Adam Cole noted: “Anything other than a prediction of a significant Conservative majority would be GBP-negative from current pricing.”
Meanwhile, the single currency slipped against the pound despite data showing that French consumer confidence had hit the highest level since the start of Emmanuel Macron’s presidency.
Just a year ago confidence plummeted thanks to weekly “yellow vest” protests, but Mr Macron’s measures, introducing a €10 billion tax relief package gave the bloc’s second largest economy a boost.
The next data likely to impact the GBP/EUR exchange rate is Germany’s inflation stats.
Rising inflationary pressures could support the euro.