Pound slips as poll forecasts tight election race

On Wednesday, the British Pound dropped against the US Dollar after a new poll found that British Prime Minister Theresa May’s Conservative Party risks falling short of an overall majority in the June 8 national election.

A YouGov model showed that Prime Minister Theresa May’s conservative party could lose 20 seats in the June 8 vote, while Jeremy Corbyn’s Labor party could pick up 30 seats, leaving neither side able to claim a majority victory. The news came after a string of opinion polls show a narrowing lead for May’s Conservatives, shaking the confidence among investors that she would easily win a majority in the election.

Meanwhile Oil prices fell, as rising output from Libya added to concerns about increasing US production that is undermining OPEC-led production cuts aimed at tightening the market. Shipping data in Thomson Reuters Eikon shows that Libya shipped out an average of 500,000 bpd of Crude Oil so far this year, compared with just 300,000 bpd shipped on average in 2016.

This week, the Dollar held near two-week lows against the safe-haven Yen as investors turned cautious amid political worries in Europe and after data showed US consumer confidence fell in May and a gauge of core US inflation retreated on a year-over-year basis. Most Federal Reserve policymakers have not backed away from their expectations of two more rate increases by the end of 2017, as they see the US economy near full employment and are confident inflation would reach the Fed’s 2% goal. However, Fed Governor Lael Brainard said on Tuesday that a rate hike may occur soon, while the central bank may want to refrain from further increases if inflation remains soft.