Pound’s best winning streak in a year defies GDP, election risk

The pound gained 0.3% versus the dollar on Monday after one opinion poll showed the Conservatives six percentage points ahead of the opposition Labour party.Bloomberg/LondonThe pound headed for its longest winning streak in almost a year against the dollar, defying a report that showed UK economic growth slowed more than analysts forecast in the first quarter.Sterling reversed an earlier decline versus the US currency as investors downplayed risks from next week’s election. While two-week volatility on the pound against the dollar has jumped to the highest since September, a three-month measure of anticipated price swings has slipped to a more than seven-week low, showing investors are more concerned about the immediate aftermath of the election than the UK’s longer-term stability.“Pound strength in large part has been a function of dollar weakness,” said Neil Jones, head of hedge-fund sales at Mizuho Bank in London. “Meanwhile, the expectations for pound fallout from the election is on the decline. GDP data is also considered somewhat backward-looking.”The pound rose 0.4% to $1.5297 as of 2:05 pm London time having dropped as much as 0.4% earlier yesterday. Sterling climbed 2.2% in the previous five days. A six-day gain versus the dollar will be the longest since May 2014. The UK currency was little changed at 71.50 pence per euro, having strengthened 0.6% over the previous two days.Opinion polls show the Labour and Conservative parties passing a narrow lead back and forth between them, suggesting neither will win overall control of Parliament without the help of smaller parties. That raises the likelihood of protracted negotiations to form a government, and even risks leaving Britain with its first minority administration since the 1970s.The pound gained 0.3% versus the dollar on Monday after one opinion poll showed the Conservatives six percentage points ahead of the opposition Labour party.The survey, by former Conservative party Deputy Chairman Michael Ashcroft, gave David Cameron’s party 36% of the vote, ahead of Labour’s 30%. A Populus poll released earlier on Monday had Labour at 36% and the Conservatives at 33%.UK government bonds were little changed, with the benchmark 10-year gilt yield at 1.70%. The price of the 5% bond due in March 2025 was 129.855% of face value.Britain’s economy expanded 0.3% in the three months through March, the least since the end of 2012 and compared with growth of 0.6% in the last quarter of 2014, the Office for National Statistics said yesterday. The median estimate of analysts in a Bloomberg survey was for a reading of 0.5%.