U.K. Investors Brace for Falling Pound Following General Election

投资者and fund managers are anticipating that Thursday’s U.K. general election results will trigger a fall in sterling when markets open Friday, despite their confidence in the ultimate outcome.

While fund management firms expect a Conservative Party win, they think the result will not be as emphatic as polls had predicted when the election was announced in April, which may lead to a fall in the British pound. Prime Minister Theresa May called for an early general election on June 8 — ahead of the regularly scheduled election in 2020 — in a bid to win more Conservative seats in Parliament. With the current Conservative majority of only 17 seats in the House of Commons, May has less power to negotiate the terms of the U.K.’sexit from the European Unionthan she would like. A number of Conservatives are seeking a so-called hard Brexit, or a swift and total withdrawal from the EU. May is seeking a softer Brexit, which she deems less likely to harm the U.K. economy, according to reports.

Philippe Ferreira, head of hedge funds research at Lyxor Asset Management, wrote in a report on Tuesday that macro hedge funds on the Lyxor platform were net short sterling. His report said macro hedge funds had added to their short sterling positions going into the vote, “at a time when opinion polls narrowed and expectations that the Tories would significantly reinforce their majority in the House of Commons vanished.”

Tom Elliott, international investment strategist at financial consultancy deVere Group, said in a report he thinks there is a 55 percent chance the Conservatives will have a majority of fewer than 60 seats in the House of Commons, which could lead to some volatility in the pound. (In the U.K. a party has to win 326 seats to win an outright majority; if it cannot do so, the largest party can form a government by sharing power with another party, as the Conservatives and the Liberal Democrats did in the coalition government of 2010.)

“Should this happen, sterling would wobble, and would fall sharply if that majority is below 40 and Theresa May is again beholden to the hard Brexit lobby of Tory MPs,” he wrote. “The FTSE 100 would rally as sterling falls, U.K.-focused stocks weaken and gilt prices would rise (and yields fall) in anticipation of a weaker economy.”

Jupiter资产管理的投资组合经理Alastair Gunn在一份报告中加入了客户，即“Sterling在投票日”之前的“英镑在艰难时期”。

Investor reactions follow an opinion poll published Tuesday by pollsters at Survation that suggests the U.K. may be heading for a hung parliament — where no party has a clear majority.

The poll of more than 1,100 U.K. residents over the age of 18 , conducted on June 2 and 3, suggests the Conservative lead — measured as high as 16.6 percent on May 9 — could be less than 2 percent.

At the beginning of the election, poll data was being treated with caution because predictions of the outcome from the U.K.’s EU referendum and the U.S. election result proved to be wide of the mark.

However, market observers at Schroders think polls are still influencing how investors are positioned. Azad Zangana, senior European economist at the British fund management firm, says the company is anticipating a Conservative majority, but the size of the increase is now difficult to predict.

“If it is only a small increase, that could hurt sterling,” Zangana says. He says the election was originally called to strengthen May’s hand against backbench members of Parliament who would like to pull out of the EU immediately. “That sort of 50-seat majority is the magic number; if they manage to get over that point, we can see more investor optimism,” he says.

然而，并非所有基金管理人员都希望Sterling降落。德福斯·克鲁兹康普斯（Deutsche Asset Management）首席投资官员周三发表了一份声明，称英镑可能加强，基于公司的“基本案例”的“稳定或增加的保守党大部分”。

Elliott承认，延伸超过60的任何保守的多数将由货币投机者欢迎，向上派遣英镑。他说，投资者会看到一大多数，允许忽视她议会的“估计30左右”，他们希望以最难的条款离婚。