The pound slipped to multi-day lows against the euro and the franc in the European morning deals on Wednesday, as caution prevailed ahead of the U.K. elections tomorrow, with polls showing the outcome could be too close to call.
Recent polls showed that the Conservative party is running neck and neck with the opposition Labour party in the opinion polls, signaling that U.K.’s main political parties are unlikely to win outright majority seats to form government.
This election appears to deliver a hung parliament, which could lead either the Conservatives or Labour to find support from other parties to form a coalition government or work in a minority government.
Upbeat U.K. services sector reading for April failed to inspire the currency.
Survey results from Markit Economics showed that the British services sector grew the most in eight months in April, led by marked gains in new business, which prompted firms to continue with robust pace of job creation.
The seasonally adjusted Markit/CIPS UK Services Purchasing Managers’ Index for the services sector rose to 59.5 from 58.9 in March. Economists had expected a score of 58.5.
The pound was trading mixed in the Asian session. The currency rose against the greenback and the yen but was steady against the franc. Against the euro, it fell.
In early European trading, the pound fell to 1.3998 against the franc, a level not touched since February 9, while it hit a 5-day low of 0.7418 of against the euro. The pound was valued at 1.4061 against the franc and 0.7360 against the euro at yesterday’s close. The next possible support for the pound may be located around 1.38 against the franc and 0.75 against the euro.
The pound slipped to 2-day low of 181.43 against the yen, reversing from an early high of 182.50. At yesterday’s close, the pair was worth 181.91. If the pound continues slide, it may find support around the 181.00 zone.
The U.K. currency reversed from an early 5-day high of 1.5240 against the greenback, paring gains to 1.5149. Continuation of the pound’s downtrend may lead it to a support around the 1.50 area.
Looking ahead, ADP U.S. private payrolls data and Canada Ivey PMI – both for April, are slated for release in the New York session.
At 9:15 am ET, Federal Reserve Chair Janet Yellen and International Monetary Fund Managing Director Christine Lagarde are scheduled to participate in a “Finance and Society” conversation before the Institute for New Economic Thinking Conference on Finance and Society hosted by the IMF in Washington DC.
At 1:15 pm ET, Federal Reserve Bank of Kansas City President Esther George participates in a panel on “Credit Markets: Booms, Busts and Distortions”, an event hosted by the International Monetary Fund, in Washington DC.
After 15 minutes later, Federal Reserve Bank of Atlanta President Dennis Lockhart is expected to speak on the economic outlook and monetary policy before a luncheon hosted by the Baton Rouge Rotary, in U.S.
The material has been provided by InstaForex Company – www.instaforex.com