LONDON: Market bets on how volatile the pound will be over the next 24 hours surged to their highest in a year on Thursday as Britain began voting in a parliamentary election which some polls show has become too close to call.
Headline rates for sterling hit two-week highs in morning trade in London after polling organisations' last surveys before voting showed Prime Minister Theresa May's Conservatives on course for victory.
Volumes of spot trading in sterling against the dollar and euro were less than half of their normal daily averages and the bigger price action was in options contracts used by companies and investors to hedge against major swings in the currency.
Sterling overnight implied volatility surged past 30 percent against both the euro and the dollar.
Against the European single currency those were the highest rates since the aftermath of last year's Brexit referendum vote to leave the European Union, pointing to nerves that an upset could deny May outright victory.
"The pound is likely to stage a modest relief rally if the Conservatives secure a larger majority," said Lee Hardman, a currency analyst with MUFG in London.
"The final polls support that assumption revealing that the Conservatives hold an average lead of around 7.5 percentage points, which compares to the 6.5 percent advantage they won over the Labour Party in the 2015 elections."
There has been a wide split in polling ahead of Thursday's vote - some surveys showing May only 1-3 points ahead while others give her an 8-10 point margin.
A final poll from the IPSOS Mori organisation is expected later on Thursday.
Comments
Comments are closed for this article.