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Dec. 11, 2019, 6:34 a.m. EST

Sterling inches lower as poll shows Conservative lead slipping ahead of U.K. election

The possibility of a hung parliament can’t be ruled out, say analysts

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By Barbara Kollmeyer, MarketWatch

Getty Images
U.K. Prime Minister Boris Johnson is applauded by supporters after speaking at the Globus Group factory on December 10, 2019 in Manchester, England.

The pound came under slight pressure on Wednesday after a fresh YouGov poll predicted a slimmer-than-expected lead for Prime Minister Boris Johnson’s Conservative Party in a General Election that is now less than 24 hours away.

Sterling /zigman2/quotes/210561263/realtime/sampled GBPUSD -1.0410%  slipped roughly 0.1% to $1.3152 from a level of $1.3155 seen late on Tuesday in North American trading. Losses were trimmed from a deeper loss seen at the start of trading. That cut into a gain for the FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -1.18% , which gave up a gain of 0.4% to turn 0.2% lower to 7,197.97.

The blue-chip index benefits from a weaker pound, as many multinational companies listed on the index earn the bulk of their revenue outside the country. The poll was pressuring the FTSE 250 midcap index /zigman2/quotes/210598417/delayed UK:MCX -2.34% , which is heavy with U.K.-focused stocks.

A YouGov poll released late on Tuesday projected that the Conservative Party would win 339 seats in Parliament, versus 231 for Labour.

“The previous iteration of the poll showed the Conservatives with a lead of 68 seats so the forecast lead has been cut in half, which makes things a little more interesting ahead of the vote tomorrow,” said a team of strategists led by Craig Nicol at Deutsche Bank, in a note to clients.

“Markets for the first time need to worry about a hung parliament and what that might mean in terms of more uncertainty over the economy and Brexit,” Neil Wilson, chief market analyst at Markets.com, told clients. He said a hung parliament resulting from Thursday’s election would push sterling down to $1.27 and pressure those midcap stocks.

Read: Here’s everything investors need to know ahead of Britain’s election

The pound has gained about 1.5% for the month of December and roughly 6% over the past couple of months as investors have increasingly priced in a victory for Johnson. Markets expect the Conservatives to push through a deal to exit from the European Union if Johnson’s party wins a majority.

Read: Brexit stocks that could soar if Boris Johnson wins the U.K. election

Among stocks on the move in London, shares of JD Sports Fashion /zigman2/quotes/207007202/delayed UK:JD -0.46%  led the downside on the Stoxx Europe 600, with a drop of 9%. Those losses came after the sport-fashion retail group’s shareholder Pentland said it has reduced its stake, selling close to 24 million shares.

The share sale will allow Pentland to fund future investment activity and increase the free float to meet further interest from JD and other shareholders, said Stephen Rubin, chairman of Pentland Group, in an emailed statement. He said Pentland remains “committed to remaining a long-term majority shareholder in JD.”

Among those midcap stocks, shares of Stagecoach Group /zigman2/quotes/206082799/delayed UK:SGC +4.52%  jumped 2.7%. The transport company posted a 35% rise in first-half pretax profit after booking lower costs and declared an interim dividend.

US : Tullett Prebon
-0.0129 -1.0410%
Volume: 0.0000
April 3, 2020 4:59p
-64.72 -1.18%
Volume: 0.00
April 3, 2020 4:59p
-337.59 -2.34%
Volume: 0.00
April 3, 2020 4:54p
UK : U.K.: London
407.70 p
-1.90 -0.46%
Volume: 2.65M
April 3, 2020 4:35p
P/E Ratio
Dividend Yield
Market Cap
£3.97 billion
Rev. per Employee
UK : U.K.: London
69.35 p
+3.00 +4.52%
Volume: 1.21M
April 3, 2020 4:35p
P/E Ratio
Dividend Yield
Market Cap
£381.56 million
Rev. per Employee

Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.

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