British pound came under pressure on Wednesday after a new poll found that British Prime Minister Theresa May’s Conservative Party risks falling short of an overall majority in next month’s national election. The pound fell to $1.2791, near a one-month low of $1.2775 touched on Friday. The pound also slipped to 0.8738 pound per euro, near Friday’s eight-week low of 0.8750.
New constituency-by-constituency modelling by YouGov showed the Conservative Party might lose 20 of the 330 seats it holds while the opposition Labour Party could gain nearly 30 seats, The Times said. The news came after a string of opinion polls show a narrowing lead for May’s Conservatives, shaking the confidence among investors that May would easily win a majority in a national election on June 8.
The dollar fell to two-week lows against the safe-haven yen as investors turned cautious amid political worries in Europe as well as weaker stock and commodity markets after a long U.S. holiday weekend. Worries that U.S. political stalemate due to investigations into President Donald Trump’s ties with Russia could hamper progress on tax cuts and other stimulus measures from Washington has been undermining the dollar.
The dollar fell to near two-week low of 110.665 yen and last traded at 110.85 yen. The dollar index dipped to 97.396, giving up its gains so far this week. The euro also recovered from Tuesday’s low of $1.1110 to $1.1176, despite worries about an early election in Italy and a softer-than-expected inflation reading in Germany.
In the United States consumer spending recorded its biggest increase in four months in April and monthly inflation rebounded, pointing to firming domestic demand that could allow the Federal Reserve to raise interest rates next month. But some market players also say signs of softness in some economic data are raising questions about whether the Fed can raise interest rates two more times this year and start shrinking its balance sheet later this year.