Why Corbyn's surge could be good news for sterling

Polls are narrowing across the Irish Sea...

Why Corbyn's surge could be good news for sterling

Jonathan Brady/PA Wire/PA Images

As the UK trundles towards its snap General Election on June 8th, the latest opinion polls suggest that it could result in a hung parliament.

Sterling slipped by nearly a cent to below $1.28 - its weakest level since April 21st - following YouGov research published in The Times.

The polling figures came in stark contrast to earlier expectations that the Conservatives would increase their majority. They showed Theresa May's party might lose 20 of the 330 seats it holds, with Jeremy Corbyn's Labour gaining nearly 30 seats.

JP Morgan, the world's second-largest currency trader, has issued a note saying that a strong performance from Labour could help sterling values to rise.

"A hung parliament would in more normal circumstances be viewed as quite negative for sterling," it stated.

"But in the post-referendum world, all political developments need to be viewed through a Brexit prism and an argument can be made that a hung parliament which delivered or held out the prospect of a softer-Brexit coalition of the left-of-centre parties [that] might actually be GBP positive," the US firm added.

The YouGov research, based on 50,000 interviews, allowed for big variations in the outcome of the election, ranging from a Tory total number of seats as high as 345 to as low as 274.

Additional reporting by IRN