Sterling fell as much as 0.3% in early London trading after a YouGov poll showed the Conservative party’s lead over Labour narrowing to 11 points.
The poll was the third in a row to show the Conservative lead dwindling before Britain’s election on Dec. 12.
The pound may also have been weakened by reports of a surge in under-35s registering to vote before the deadline at midnight last night, since young people are less likely to support the Conservatives.
So far, the market has been relatively complacent when it comes to the risks ahead. Yes, the Tories still have the lead but they’re certainly not gaining.
Polling is not infallible. Before the 2016 Brexit referendum, the side that favoured remaining in the European Union was leading in the polls.
The focus will be increasingly on the polls now.
YouGov will release seat-by-seat predictions of the election outcome at 22.00 GMT. The multilevel regression and post-stratification model accurately predicted the 2017 hung parliament, so it will be closely watched.
Anything other than a prediction of a significant Conservative majority would be GBP-negative from current pricing.