Pound Erases Decline as Euro Slips Ahead of U.K. Vote, ECB Meet

(Bloomberg) -- The pound erased a decline after a weekend terror attack in London as a poll showed the ruling Conservatives holding a double-digit lead ahead of elections this week, while commodity currencies gained as oil prices jumped.

With the U.K. election result due on Friday, investors will be focusing on British poll surveys that have showed Prime Minister Theresa May’s lead narrowing in recent weeks, said Athanasios Vamvakidis, head of G-10 currency strategy at Bank of America Merrill Lynch.

“They have come too close and investors will be looking for the latest trends to assess the probability of any surprising outcome,” Vamvakidis said in emailed comments.

The U.S. dollar traded mixed in the basket of Group-of-10 currencies, rising against the euro ahead of a European Central Bank meeting on Thursday. The Australian and Canadian dollars led gains against the greenback after Saudi Arabia, Bahrain, the United Arab Emirates and Egypt said they will suspend air and sea travel to Qatar.

• EUR/USD -0.14% to 1.1263; stop losses seen at 1.12, according to a trader who asked not to be named because the person isn’t authorized to speak publicly
  • Investors are lightening their exposure as the ECB meeting looms 
  • While keeping a positive view, Nomura Holdings sees short term risk for the shared currency
• GBP/USD +0.12% to 1.2904, after low of 1.2853; resistance at 1.2917-27, 21-DMA, May 31 high, May 24 low, and support at 1.2830, June 1 low
  • Support for Conservatives at 45%, no change vs previous poll released last week, and at 34% for Labour, up 1pp, according to latest Guardian/ICM poll
  • Currency found support near its 10-day moving average even though U.K. services data was weaker than forecast for May
• AUD/USD +0.50% to 0.7480; takes out Friday’s non-farm payroll-data inspired high of 0.7447 on fund-related buying against the Japanese yen and the New Zealand dollar, according to Asia-based FX traders
• Ahead of former FBI director James Comey’s testimony on Thursday, investors are looking to hold long U.S. dollar positions against the Russian ruble and Mexican peso, according to another trader in London, who asked not to be named because they aren’t authorized to speak publicly

To contact the reporter on this story: Stefania Spezzati in London at sspezzati@bloomberg.net.

To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net, Neil Chatterjee