Europe Politics

Pound shaken as UK election poll puts Johnson outright win in doubt

Key Points
  • Sterling took a dip on Wednesday as a voter poll raised the prospect of a hung parliament – in which no one party has a governing majority – at Thursday's general election in the U.K. 
  • The pound weakened against the dollar, weakening to $1.3107 earlier on Wednesday before rebounding to $1.3151,
  • This came after a new YouGov MRP poll showed that the number of seats the ruling Conservative Party are expected to win had declined. 
Sterling weakens as poll shows closer UK election race

Sterling took a dip on Wednesday as a respected voter poll raised the prospect of a hung parliament – in which no one party has a governing majority – arising from Thursday's general election in the U.K.

The pound weakened against the dollar, weakening to $1.3107 earlier on Wednesday before rebounding to $1.3151, after a new YouGov MRP poll showed that the number of seats the ruling Conservative Party are expected to win had declined from two weeks ago.

The YouGov MRP poll showed the Tories could win 339 seats (22 more than they took in 2017) and a vote share of 43%. The MRP poll is one of very few surveys that roughly predicted the result of the 2017 election.

Its latest findings estimate that the Conservative's predicted majority has been cut down to 28 seats from 68 seats two weeks ago, with Labour closing the gap on the Tories.

Meanwhile, the poll showed that Labour are set to lose 31 seats – falling from 262 in 2017, to 231 – and take 34% of the vote (a six percentage point decrease).

The poll points to the Conservatives seeing their best performance since 1987 and Labour seeing it's worst performance since 1983, if the poll is borne out in the vote.

Marginal Labour seats the 'crucial battleground' in UK election: Polling expert

The Conservatives led by Prime Minister Boris Johnson are relying on achieving a majority in the 650-seat parliament in order for him to get his Brexit deal, the Withdrawal Agreement, through Parliament and for the U.K. to leave the EU by January 31, 2020. Johnson's mantra throughout the election campaign has been to "get Brexit done."

His main political rival, Jeremy Corbyn, the leader of the Labour Party, has said his party will offer a public vote on a renegotiated Brexit deal, with the option to remain. The anti-Brexit Liberal Democrats want to stop Brexit altogether. The Brexit Party under Nigel Farage says Johnson's Brexit deal "is not Brexit" and is level-pegging with the Green Party.

Polling guru John Curtice told CNBC Wednesday that "the poll is confirming what we've long suspected, which is that the Conservative lead over Labour has narrowed a bit, compared with a fortnight ago," he said.

"This poll emphasizes two things that we've long known from all of the polling. The first thing is that we have to remember is that what the Conservatives have to do, if they're going to get the withdrawal treaty that will secure the U.K.'s exit from the EU by the 31st January, they have to get an overall majority."

"It isn't enough just to get more seats than everybody else. they have to get past the 326 (seat) mark because no other party is willing to vote for the government's withdrawal treaty ... and to get to 326, therefore the Tories have to do rather well," he said.

Voter polls have been proved wrong in the recent past in the U.K. - they generally did not predict a win for the Leave vote in the Brexit referendum of June 2016, or that the Conservative Party's drubbing in the 2017 snap election in which then-Prime Minister Theresa May lost her party's majority.

The YouGov/MRP poll noted that "like all predictions our model comes with some uncertainty, and the margin of error here could put the final number of Conservative seats from 311 to 367. This means that we absolutely cannot rule out the 2019 election producing a hung Parliament — nor can we rule out a larger Conservative majority."

Curtice told CNBC's Willem Marx that while the Tories could end up with fewer than 326 Tory seats, it "is clearly still by far the less likely option of the two (outcomes) of a hung parliament versus Boris Johnson having a majority."

Alastair Campbell: UK election 'joyless, miserable and dispiriting'

Party leaders are travelling around the country Wednesday for a last frenetic day on the campaign trail before the general election is held on Thursday. Both main parties have experienced mixed fortunes during the election race with question marks raised over the trustworthiness of all parties and their spending pledges.

The vote is widely being pushed as a vote on Brexit by the Conservative Party although Labour has had some success in raising the future of the National Health Service as a rival issue.

Alistair Campbell, former Chief Strategist to Labour Prime Minister Tony Blair told CNBC's Street Signs on Tuesday that he "wouldn't put too much straw on any polls right now" and says tactical voting (in which voters support a candidate and party they would not usually support in order to try to prevent a win for a more undesirable candidate) could upset the result.

"My own view is that (the poll) understates where the race is right now ... People realize that the chance of Labour getting a majority are pretty much zero so the choice is between Johnson having a lot of power or a bit of power. And I think the country are getting pretty sickened at the thought that it might be a lot of power, and therefore a lot of tactical voting is going on."

"That means that people like me who are historically Labour might in some circumstances look to vote for a Liberal Democrat candidate if they're best placed to win, and vice versa, so that is definitely happening," he told CNBC's Street Signs.