Jeremy Corbyn victory may lift pound

Sterling looks set for a volatile run into British elections next week but an argument can be made for markets reacting positively to a defeat for UK prime minister Theresa May’s Conservatives, according to analysts from US banking giant JPMorgan.

The Conservatives’ lead has shrunk in some opinion polls to as low as 5 percentage points from close to 20 points a month ago, driving the pound lower in the past week.

That has seemed to be in line with traditional financial market logic, which has usually favoured right-leaning parties who keep a tighter rein on public spending over those such as Britain’s left- leaning Labour Party, led by Jeremy Corbyn, who want to tax more and spend more.