LONDON: U.K. blue-chip shares advanced on Monday, getting a boost from a weaker pound after an election poll showed support for Theresa May’s Conservative Party weakening ahead of the June 8 election. The FTSE 100 index GBPUSD, -0.1769% picked up 0.3% to end at 7,496.34, rising for a second straight session.
“The general election is starting to look like it could spark some serious volatility as we head into June. For the first time a Tory landslide is not a given and there is reason to think that this alone could introduce a new bout of risk-off sentiment,” said Neil Wilson, senior market analyst at ETX Capital, in a note. Labour cut its gap with the Tories to 9 percentage points, to 35% vs. 44%, in a YouGov poll for The Sunday Times, the first time a mainstream poll showed the Conservative lead reduced to single digits. The poll weighed on the pound GBPUSD, -0.1769% which dropped to an intraday low of $1.2966, and provided a boost to the FTSE 100 index. However, sterling pared its loss against the dollar later in the day after what was perceived as a U-turn from May on the Tories’ stance on lifetime care costs. It traded around $1.30 at the time of the European markets close.
The U.K. currency also slumped against the euro GBPEUR, -0.1124% to fetch €1.1575, compared with €1.1633 late Friday in New York. The euro strength came after German Chancellor Angela Merkel blamed the European Central Bank for making the euro too “weak.” A weaker sterling can help bolster foreign-denominated earnings made by multinational companies on the FTSE 100. The London benchmark pulled back last week as the pound pushed above $1.30 for the first time since September and as equities sold off on concerns that controversies surrounding the White House would derail U.S. President Donald Trump’s agenda of tax cuts, deregulation and infrastructure spending.
