With less than two weeks until the UK’s snap general election, the race for Downing Street is hotting up. Having had the strongest poll lead (~25pts) of any sitting government before an election, Theresa May’s party has seen its advantage eroded to just 5pts, with Labour’s impressive turnaround having a profound effect on both the UK 100 and the Pound Sterling.

Waking up to news that the opposition had gained yet more ground on the Tories, as the electorate balked at policy proposals, investors showed a lack of confidence in Sterling, which consequently saw the UK Index test – and eventually break out from – 2-week resistance at 7535 points to trade a fresh record high.

The extended Sterling sell-off has taken the currency to a fresh May low which has given the index’s army of internationally exposed companies an attractive translational boost, helping the UK Index trade above 7550 points for the first time ever.

But this latest poll turnaround has not been positive for all UK 100 constituents.

The most notable laggards on the UK’s blue chip index today have been the Banks. With Labour pledging to raise corporation tax and impose a so-called ‘Robin Hood’ tax on financial institutions, three of the top five fallers on the UK 100 today are high street Banks. Barclays, Lloyds and RBS have all fallen around 1.5% and continental political concerns are hurting banks across Europe too.

Today’s move is the polar opposite of that which followed the snap election announcement back in April. The UK Index fell by 180 points – or 2.5% – in a single session as Sterling rallied to 6-month highs versus US dollar and to its highest versus the Euro in 2017.

As Labour gains traction in the polls with each day that passes, the election is fast becoming another too-close-to-call affair, showing investors can’t rule out yet another political upset. Could a surprise Labour win see Sterling return to 2017 lows of $1.20 versus the US dollar, in turn pushing the UK 100 to more record highs?

Or will the Conservatives stem their losses alongside the Pound, but hurt the UK’s blue-chip index in the process? If a 180pt sell-off took place on the announcement of the election, could a Tory victory see an even greater sell-off and a return to 2017 lows of 7100 points?

After the excitement of the US, Dutch and, most recently, French elections, it’s finally the UK’s turn to be in the limelight.

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Pearse Carson, Trader, 26 May