Sterling recovers from blow following London attack

Sterling recovers from blow following London attack

LONDON: Sterling recovered ground on Monday after diving half a cent against the dollar in early Asian deals as traders reacted to another militant attack over the weekend in London ahead of Britain’s national election this week.

Saturday’s attack – the third in England in three months – saw sterling slip from US$1.2893 to US$1.2851 at the start of Asian trading.

It had recovered to stand less than 0.2% lower at US$1.2875 by 0743 GMT.

The pound was less than 0.1% higher at 87.51 pence per euro.

Sterling has wobbled over the past two weeks, with investors’ confidence that Prime Minister Theresa May would secure a landslide majority shaken by opinion polls predicting a wide range of outcomes for the June 8 snap election.

Polls have results ranging from a slim majority for May’s Conservative Party to a hung parliament – worrying investors who had bet a landslide win for May would translate into a stronger bargaining position in Britain’s exit talks with the European Union, which begin on June 19.

Besides awaiting further polls, investors were watching for a reading on the UK’s outsized services sector, with the Markit/CIPS services purchasing managers’ index due at 0830 GMT.

A Reuters poll of economists predicts a reading of 55 for the index for May versus April’s 55.8.

“We expect only limited market impact, especially as the main focus remains on politics,” Credit Agricole strategists wrote in a note to clients.

“Regardless of this week’s outcome of UK elections, we believe the pound should prove a sell on rallies. This is especially true as investors’ focus will swiftly shift to actual Brexit negotiations later this month.” – Reuters

Source:The  Star