Pound Remains Lower as Poll Shows U.K. Debate Was Almost a Tie

(Bloomberg) -- The pound remained lower Tuesday after a snap poll showed respondents believed Prime Minister Boris Johnson narrowly edged out opposition leader Jeremy Corbyn in their first debate ahead of the U.K. election.

Sterling was down 0.2% to $1.2926 at 9:46 p.m. in London, poised for the first loss in five days. The currency touched the day’s low at $1.2911 just before the start of the debate and pared losses throughout as the leaders traversed issues ranging from Brexit to the nation’s health-care system.

The snap YouGov poll of 1,600 people showed 51% believed Johnson won, against 49% for Corbyn.

The pound had been strengthening over the past week as opinion polls suggested a Conservative win and the ruling party’s candidates pledged to support the passage of Johnson’s Brexit deal if they are elected. The face-off was the first chance for Corbyn to directly challenge his rival since campaigning officially kicked off.

Investors favor a Conservative majority government as the best outcome from the Dec. 12 vote, as it could allow Johnson to push through his Brexit plan and move on to the next phase of Britain’s exit from the European Union. According to a Bloomberg survey, the pound is seen rallying more than 3% to $1.34 on this outcome, while a Labour coalition government would send the currency down nearly 2% to $1.27 in the short-term -- although it could ultimately spur a rally if a second Brexit referendum were called.

The market remains skeptical of opinion polls, after the failure to predict either the 2016 Brexit vote or the 2017 general election. Options suggest the U.K. currency could trade in tight ranges into the vote, with a measure of expected large moves in the pound-dollar pair touching its lowest since July.

“It’s still completely open -- anything can happen,” David Bloom, global head of foreign-exchange strategy at HSBC Holdings Plc, said in an interview with Bloomberg Television from Doha earlier Tuesday. “The political outcome will determine the future of the currency.”

©2019 Bloomberg L.P.

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