Pound under pressure as opinion polls narrow

By Angela Monaghan, Economics Reporter Published: 7:38AM GMT 02 March 2010

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The UK banking was down some-more than a cent opposite the dollar at $1.4868, the lowest spin given May last year, as it additionally enervated opposite the euro. The declines follow a vehement day for argent on Monday, that saw it dive as most as 4 cents at one point.

The bruise has found itself in the eye of a charge over the past week as a multiple of fears clap investors. Against the backdrop of a frail mercantile recovery, the awaiting of a hung council is raising regard of a check in rebellious Britain"s jot down bill deficit.

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"There are a series of stories operative opposite sterling, but the choosing is at the top," pronounced Simon Derrick, an researcher of Bank of New York. "The warn has been how fast the polls have narrowed and that"s left investors confronting uncertainty."

Bets on the bruise descending serve had already doubled given the begin of the year, with speculators construction up 62,884 net short positions, prior to a YouGov check over the week end caused uninformed jitters. The check showed that the Conservative lead over Labour narrowed to only dual points, creation the awaiting of a hung council really real.

"Driving the move stays the fright of UK domestic grid-lock," pronounced Chris Turner, head of banking plan at ING. "The marketplace stays aroused that minority governments will onslaught to fast residence the UK"s 12pc of GDP bill deficit, ensuing in the loss of the UK"s AAA emperor credit rating."

If Britain lost such a rating, unfamiliar investors would be expected to spin their behind on the UK and the cost of borrowing would rise, potentially sparking a debt crisis.

Currency experts pronounced that as domestic doubt builds prior to the choosing the bruise is expected to break further. Steve Barrow at Standard Bank pronounced argent was expected to be closer to $1.40 than $1.50 by the time of the election. There was additionally conjecture that piece of the argent sell-off was related to Prudential"s programmed $35.5bn merger of US insurer AIG"s Asian assets, with dollars in direct at the awaiting of the deal.