LONDON May 30 Sterling rose against the dollar
on Tuesday, with investors shrugging off opinion polls showing
British Prime Minister Theresa May's lead over the Labour
opposition narrowing less than two weeks before a general
The pound has risen nearly 4 percent since May called a snap
election for June, as investors bet a then-predicted landslide
majority for May would result in a stronger hand in negotiating
Britain's exit from the European Union.
But polls taken since the opposition Labour Party and May's
Conservatives released their election manifestos have shown
Labour catching up, worrying investors and pushing the pound
down almost 2 cents last week.
While the latest polls confirm the narrowing trend, they
still show May's Conservatives with a solid lead, leaving some
such as MUFG currency strategist Lee Hardman, keeping their bets
"If the polls are to continue to narrow next week we could
obviously drop down another couple of big figures. But I think
there's good support around $1.26-1.27," he said.
"Our base case scenario is the Conservatives will ultimately
win a larger majority - which could see cable (sterling/dollar)
pop back towards the $1.30 level following the election."
Sterling was up nearly 0.2 percent at $1.2855 by 0852 GMT.
It was up 0.3 percent against at 86.69 pence per euro.
In a televised debate on Monday, May said she would walk
away from divorce talks with the European Union without a deal
if she had to, but Labour leader Jeremy Corbyn said he would
make sure an agreement was reached if he won power.
Kathleen Brooks, research director at City Index, said
markets could begin pricing in the prospect of a Labour victory
if the polls were to narrow further, although that would not
lead to an "outright collapse" in sterling given Labour's stance
"While Labour’s tax and spending plans are unlikely to win
any friends in the financial sector, the party’s more sanguine
stance towards striking a trade deal during the Brexit
negotiations might find common ground with some City grandees,"
(Reporting by Ritvik Carvalho, editing by Nigel Stephenson)