Pound hits seven-month high versus dollar

Sterling hit a seven-month high against the dollar on Wednesday as the Conservatives continued to lead the polls in the run-up to the general election next week.

At 0850 GMT, the pound was up 0.4% against the dollar at 1.3040 and 0.3% firmer versus the euro at 1.1760.

Neil Wilson, chief market analyst at Markets.com, said there were a few factors at play. He pointed to "very pronounced" softness in the dollar since the end of November, with the dollar index going from 98.40 to 97.60 in a few sessions, hit by trade war worries.

"Polling data is remarkably consistent - whatever the narrowing that may have been suggested we are still looking at polls showing a healthy Tory lead and Conservative majority government," Wilson added.

"The closer we get to the election the more the consistency of the polls needs to be heeded by investors looking at what shape the next government will take.

"And having pushed the door ajar yesterday at 1.30, bulls came knocking a lot harder this morning as the dollar comes under pressure."

Adam Seagrave, head of global sales trading at Saxo Markets, said: "FX traders will now ponder which way the risks are skewed as we run into election week with a feeling among some that the easy money has been made and with GBP well above the August lows, the risk to the downside is substantially higher."