Pound Eases As Conservative Gap Narrows In Opinion Polls

The pound declined against its major counterparts in the European session on Monday, as opinion polls showed a narrowing lead for the Conservative party over the opposition Labour Party before the general election due on December 12.

A Survation poll for ITV's Good Morning Britain found the Tory lead over Labour had narrowed to 9 points from last week.

The poll showed Tory lead was up by one point at 42 percent, but Labour have gained three points to 33 percent.

The telephone poll by Survation was conducted between November 26 and 30.

Other surveys also showed a slimmer lead for the Tories, raising the chances of a hung parliament.

Final data from IHS Markit and Chartered Institute of Procurement & Supply showed that the UK manufacturing downturn continued in November amid the uncertainty caused by the forthcoming general elections and the delay in Brexit.

The headline factory Purchasing Managers' Index fell to 48.9 from 49.6 in October. But the score was above the flash estimate of 48.3.

The currency traded mixed against its major counterparts in the previous session. While it rose against the yen and the franc, it was steady against the greenback and the euro.

The pound declined to 0.8541 against the euro, down from a high of 0.8524 seen at 2:15 am ET. The next possible support for the pound is seen around the 0.88 level.

The pound reached as low as 1.2881 against the franc, pulling away from a high of 1.2930 it touched at 2:15 am ET. Should the pound slides further, it may find support around the 1.25 level.

After an uptick to 1.2928 against the greenback at 2:15 am ET, the pound eased off to 1.2899. The pound is seen locating support around the 1.25 region.

The pound retreated from an early high of 141.72 against the yen, with the pair trading at 141.49. On the downside, 139.00 is possibly seen as the next support level for the pound.

Survey from Nikkei showed that Japan manufacturing PMI continued to contract in November, albeit at a slower pace, with a manufacturing PMI score of 48.9.

That's up from 48.4 in October, although it remains solidly beneath the boom-or-bust line of 50 that separates expansion from contraction.

Looking ahead, at 9:00 am ET, European Central Bank President Christine Lagarde will testify before the European Parliament in Brussels.

In the New York session, U.S. ISM manufacturing PMI for November and construction spending data for October will be featured.