Sterling fell 0.5% after a survey which placed doubt over the Conservative’s ability to win an outright majority on 8 June was published by The Times.
After recovering some initial losses, the pound stood at $1.28 on Wednesday morning, a fall of 0.36%.
It was also 0.35% lower against the euro, at €1.14.
YouGov’s findings were based on examining data rather than a traditional pre-election poll and the results spelled bad news for Theresa May’s dream of a ‘strong and stable’ government.
The Tories were projected to win 43% of the vote but lose 20 parliamentary seats and miss out on the sought-after landslide win predicted when May first called the snap election.
At least 326 seats are needed to hold the majority in the House of Commons.
The survey also suggested Labour could nab 36% of the vote share and gain 30 seats.
The Liberal Democrats were predicted to nab 9% of votes, UKIP 4% and votes for other parties 7%.
However, Geoffrey Yu, head of the UK investment office at UBS Wealth Management, had his own doubts on the survey results and said the fall in sterling was a buying opportunity.
“The poll distracts from the many others showing that a Conservative majority remains the most likely outcome, as is our base case.
“With no further indications of a hung parliament, the recent fall in sterling may be seen as a buying opportunity for investors.
“We are sustaining our forecasts for sterling amid today’s volatility. We expect sterling to recover toward the end of the year and to trade even stronger against the USD and CHF in 2018.”
