MUFG Research discusses GBP outlook on the back of reports that the Brexit Party is due to stand down in 43 seats across the UK.
“The odds have shifted more in favour of a Tory election victory. Further reduction in political risk premium is probable, helping the pound, but some signs of Labour party poll gains and the macro backdrop will limit the upside.” MUFG notes.
"The latest opinion polls released this week continue to signal that the Tories hold a healthy lead over the Labour party of around 10-12 percentage points. Public support for both the two main parties (Tories and Labour) has increased since the election was called at the expanse of the Brexit party and Lib Dems. The gap though between the Tories and Labour would have to narrow materially to create more election uncertainty and weaken the pound," MUFG adds.