UK General election 2017: Pound sterling remains near two-week high as voters take to the polls

A final poll for The Independent showed on Wednesday night that Theresa May is on course for a definitive victory over Jeremy Corbyn

Analysts polled this week by Bloomberg this week agreed that of all the potential outcomes, including a win by Labour, a hung parliament would be the worst one for the pound

(Reuters)

The pound traded near a two-week high against the dollar on Thursday, as voters took to the polls in the UK’s general election.

Sterling was trading marginally lower against the dollar at around $1.2944 late in the day, not far off its $1.2970 peak hit on Wednesday, which was the currency’s highest level against the buck since 25 May.

A final poll for The Independent showed on Wednesday night that Theresa May is on course for a definitive victory over Jeremy Corbyn. If those projections prove accurate, the Conservative party would secure a 74-seat majority – the largest the Conservatives have secured since the days of Margaret Thatcher.

Analysts in recent days have said that a victory for the Prime Minister’s Conservative Party would be supportive for the pound, but they’ve also commented that this outcome is largely priced in already, meaning that a significant rally if she does win is unlikely.

Strategists at Dutch bank ING wrote in a note this week that there are two scenarios under which the pound would likely see a big move. A sizable Conservative majority, they say, could lead to a big jump, while a hung parliament would lead to a major slump.

“Maximum chaos would be if the Conservatives were only able to get somewhere between 290 to 325 seats; it’s the grey area where it’s not enough for a Conservative majority, but also potentially not enough to see a stable Labour-led coalition being formed quickly,” they wrote.

Analysts polled this week by Bloomberg also agreed that of all the potential outcomes, including a win by Labour, a hung parliament would be the worst one for the pound.

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Longer term, however, forecasters broadly agree that even a convincing Conservative win could keep a cap on the strength of the pound as it would increase the odds of a harder Brexit.

The pound remains around 13 per cent lower against the dollar since last June’s Brexit referendum but is up over 5 per cent so far in 2017.