UK poll sends sterling sliding against the euro

Sterling slid after a poll showed the Conservatives’ lead shrinking two weeks before the UK general election.

“It’s turning into a rotten end to the week for the pound,” said Craig Erlam, senior market analyst at OANDA.

Since last year’s UK referendum to leave the EU, the weakness of sterling has boded ill for many Irish exporters who sell goods and services across the Irish Sea to Britain.

At the same time, several surveys have shown that the number of visitors from Britain has fallen sharply, a key market for tourism across the island.

Against the euro, sterling tumbled by 0.8% to 87.3 pence, its lowest for two months, and slid by the same amount against the dollar, to a three-week low of $1.283.

The first opinion poll since a suicide bombing killed 22 people indicated Britain’s opposition Labour Party had cut the Conservative Party’s lead to five points with less than a fortnight to go to the parliamentary election.

Prime Minister Theresa May has said a big win would strengthen her hand in Brexit negotiations.

“With this kind of momentum and almost two weeks to go until the vote, not only is this not going to be the breeze that May anticipated when she called the snap election last month, it could yet turn into a humiliating defeat for the Conservative leader and her party,” said Mr Erlam.

Capital Economics in London said that implied increase in the Tory majority after the election had “generally been supportive for sterling on the basis that it would allow Theresa May to resist the ultra-hard Brexiteers in her own party and perhaps make the path towards Brexit generally less bumpy”.

The shift in the polls may show that popularity of a UK incumbent party is linked to the level of consumer confidence, said Capital Economics.

The rise in inflation in Britain after the Brexit vote has made households the most downbeat about their finances in more than two years, and the giant services sector is also feeling the impact, surveys showed.

Consumers — whose spending is crucial to Britain’s economy — are the least confident about their current financial situation since December 2014, and expectations about their finances over the next 12 months also fell, said polling firm YouGov. Perceptions of job security were at a four-year low.

“It looks like this may be the point where the slowing GDP figures start to translate to people’s everyday lives,” said Stephen Harms-ton, head of YouGov reports.

“The figures indicate that they are starting to experience a downturn.”

Britain’s economy slowed sharply in early 2017, data published this week showed. Weaker consumer spending played a large part in the loss of momentum.

UK stock markets, however, bucked the trend and hit record highs, with a selloff in sterling seen boding well for exporters.

Oil prices initially recovered some ground after tumbling 5% in the previous session, before falling back.

On Thursday in Vienna, the Organisation of the Petroleum Exporting Countries (Opec) and some non-Opec producers agreed to extend a cut in oil production by nine months until estors betting on longer or larger curbs. Brent crude futures LCOc1 were at $50.84 per barrel at one stage yesterday, reversing earlier gains to trade 1.2% lower on the day.

Reuters and Irish Examiner staff

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