Sterling dropped more than half a percent against the dollar late Tuesday after a new poll found that British Prime Minister Theresa May's Conservative Party risks falling short of an overall majority in next month's national election.
Signs from a string of opinion polls have suggested May's Conservatives will lose their majority. The new constituency-by-constituency modelling by YouGov showed it might lose 20 of the 330 seats it holds and the opposition Labour Party could gain nearly 30 seats.
Sterling has strengthened nearly 4 percent against the Dollar since May called a snap election for June, as investors bet a then-predicted landslide majority for May would result in a stronger hand in negotiating Britain's exit from the European Union. Investors had been concerned about Labour catching them up, worrying investors and pushing the pound down almost 2 cents last week.
Major US banks believe the Pound looks set for a volatile run ahead of British elections next week. However, an argument can be made for markets reacting positively to a defeat for Prime Minister Theresa May's Conservatives.
Mario Draghi spoke to the European Parliament committee on economic affairs and argued that extraordinary monetary policies are still needed in order to raise inflation but remained surprisingly upbeat on the economy.
It is believed the views of Mario Draghi, the European Central Bank (ECB) president, are increasingly at odds with other policymakers. These views are expected to temper expectations of any policy move by the central bank in June.