The pound nose-dived against the single currency as markets opened on Wednesday morning after the latest, and last, YouGov poll showed a narrowing of the gap between the Tories and the Labour party. As a result, GBP/EUR dropped into the law 1.18’s but then made a stead recovery over the course of the day, trading in the high 1.18’s at the time of writing.
Tuesday night’s YouGov poll is based on the largest set of survey data available in the polling industry so is considered to be the most trustworthy of the recent polls. The poll suggests that the Tory’s majority has now been cut to 28, down from 68 predicted in the last MRP survey. The predicted Tory majority is now within the margin of error, raising the prospect of a hung parliament and weakening the pound in the process. GBP/USD has behaved in the same way as GBP/EUR; falling on Wednesday morning but then recovering over the course of the afternoon.
There is no data to note from the UK on Thursday so all sterling movement will be election related. We also have a monetary policy statement from the ECB along with the usual accompanying press conference. This should make for an interesting day for the GBP/EUR pair.