Pound sterling shaken from place after polls demonstrated that Conservative party on the short lead of UK elections scheduled on June 8.
Conservative Party’s Lead Cut into Half
The descent of sterling was caused by the polls which revealed that the lead reduced to 9 points. The Conservative Party’s original lead back on the campaign period was nearly 20 points.
Several Tory voters, especially the older ones are disappointed with the current proposals that the British Prime Minister Theresa May sends out. The said proposals are becoming sources for criticism for May. The British Prime Minister intends to reform the UK’s social care, including the idea that the elderly should pay for their own care within their respective homes, unless they have under £100,000 in assets. Elder people dislike the idea of forcing them to sell their houses just to afford their healthcare.
Aside from the issues concerning elder people, there have also been floating proposals to scrap free school lunches for kids from poor families and such is receiving reactions from the general public. Concerning the winter fuel allowance (pensioners are being helped in paying energy bills), May also has the plan of withdrawing it; hence, again, it is gaining disapprovals.
Weaker Sterling Compared to USD and EUR
On Friday, the GBP/USD crashed by 0.51% to 1.2968, ending a seven-month climax of 1.3039. It was also noted that the sterling sank against the euro – making EUR/GBP increase by 0.19% to 0.8612.
However, on Sunday, Senior Conservative ministers declined the alleged reduction of state support to elderly voters. They even acknowledged that doing such can weaken support from them. Monday’s poll also revealed that respondents were more inclined to saying that the Labour Party is more elderly-oriented and healthcare-supportive.
Sterling to Keep Moving
Looking back from last year, sterling also fell from its spot right after the British European Union referendum. The same thing happened previously in October when it was announced that UK is going to leave the European Union.
Analysts are saying that the possibilities are countless. One, after the Brexit, UK economy may grow sluggishly. It can make investors evade UK. Second, there might be interpretations stating that exporting from UK will become pricier; hence, the pound may fall critically. Third, investors might just be confused if UK will still be a good option or not. It may trigger them to hold sterling assets.
Pound’s Value Affected by Political Concerns
The value of the pound is greatly affected by the political happenings within Theresa May’s leadership. The Brexit vote a year ago, May’s conference speech back in October, and even the announcement regarding a snap general election all have serious impact on its value.
Businesses are the ones suffering from such decline of the pounds’ value when they do importation of raw materials and components. Another, are the retailers, especially when they import food overseas. Inflation is affecting the civilians since the pound fell due to its effect on wages and living standards. For foreign workers, it makes them see UK as a less appealing place to work at since their wages are being converted less in their local currencies.
There are forecasts on the market expecting the pound to end lower this year. Political issues surrounding UK truly have a great impact on the sterling. No one should ignore such movement of the sterling, as there is still more than two weeks before the elections, and anything can happen.
Do you want to get updated about the latest happenings in the stock market, financial world and the economy in general? Subscribe now at FSM News to increase your knowledge and improve your familiarity!