Pound surges to two-year high against the euro

The Pound Sterling has jumped after opinion polls suggested the UK would avoid a hung parliament after next week's election. The currency reached a seven month-high against the dollar and its highest level against the euro since May 2017.

The move came after polls suggested a 10-point lead for the Conservative party and a parliamentary majority. However, analysts cautioned against relying too much on one poll and said the pound gained momentum after it went past the $1.30 mark.

The pound has risen sharply since October, gaining 6% in two months, after the EU granted Britain an extension to its departure from the bloc. This week sterling climbed further as investors saw the prospect of a hung parliament receding.

Jeremy Stretch at CIBC World Markets said move was caused by traders consolidating all the recent polls and deciding that a Conservative majority was the most likely outcome. The markets see that as ending the stalemate over Brexit. However, Michael Brown, senior analyst at Caxton, said: "As we saw in 2017, polls can sharply narrow as we approach polling day. If a repeat situation pans out, seeing Labour gain ground and hung parliament territory approach, sterling will likely face stiff headwinds."

The pound gained as much as 0.83% on Wednesday to touch $1.31 while against the euro, the pound hit a high of €1.183, up 0.84%.

Source: bbc.com


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