The pound has made a slight recovery today after suffering its biggest loss since January, on the back of election polls released showed the forthcoming elections to be held in the UK will be much closer than earlier predicted.
At 7.05pm (GMT) the British currency was trading at $1.2841 up from $1.2795 in yesterday’s trading.
The pound had been on a winning streak since April ever since British Prime Minister Theresa May called snap elections for June which the market interpreted as more political stability, as the current government was expect to strengthen their numbers in Parliament.
The elections were also expected to give May a stronger hand at the negotiating table when Brexit talks get underway.
The conservative party had a 20-point lead over labour according to other recent polls, but the one released last Friday showed the margin had been cut to just 5 points, which caused traders to dump the pound.
It will now be a wait and see game up until election day and although May should still win, the thought of Jeremy Corbyn becoming the next British Prime minister is likely to keep the pound under pressure.
“The June 8 U.K. election is approaching, and the polls suggest a tighter race than anyone expected, including most of all Prime Minister May,” said Marc Chandler, global head of currency strategy at BBH.
“We suspect that if investors thought that Labour’s Corbyn would be next Prime Minister, sterling would be considerably lower,” he added.