A hastily-arranged General Election in the U.K. - that was seen as a foregone conclusion - has suddenly sprung into life with polls tightening and some market analysts speaking about outcomes that would have been inconceivable just weeks ago.
Britain's left-wing Labour party -- under Jeremy Corbyn -- appear to have erased the gap on the ruling right-wing Conservatives in the run-up to the election on June 8, with the latest opinion polls forcing investors to entertain the possibility of a third political shock in as many years.
Until two weeks ago, U.K. Prime Minister Theresa May had appeared on track to secure a landslide parliamentary majority for the governing Tories. She had called the early vote, despite repeatedly saying she would not do so, in an attempt to secure a strong mandate during Brexit negotiations and presumably to increase the 17-seat lead that she currently has in the House of Commons.
However, on Wednesday, the latest average forecast projected May's Conservatives could actually lose seats. While the recent opinion polls show the prime minister's party maintains a slender lead, the Tories' diminishing advantage is likely to spur on their political rivals with just eight days to go until the election.
The projections show that she could even have 16 seats less than she needs for a majority, thus meaning that a coalition government would be needed to rule. This would decrease May's ability to push through any reforms and regulations.
There's even a very unlikely outcome whereby the opposition Labour party could team up with the Scottish Nationalist Party in the result of a hung parliament – where no-one has a clear majority - and challenge the Conservatives for power.
Sterling slipped on Wednesday morning after the fresh polling data suggested a hung parliament. However, just a few hours later a separate poll showed the Tories with a 15-percentage-point lead. As a result, the pound trimmed some of its losses to trade 0.1% lower against the dollar for the session.
