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- YouGov poll confirms 11 point lead for Conservatives

- Pound steadies after poor Tuesday

- Key YouGov MRP poll release is main event for today

The British Pound was seen consolidating recent losses against the Euro, U.S. Dollar and other major currencies in mid-week trade after the latest YouGov poll steadied sliding expectations for a Conservative majority at the looming General Election. With Sterling trading in response to shifting expectations for the outcome of the December 12 General Election, today's key event could well be the release of a detailed seat-by-seat prediction that in 2017 accurately called the final outcome of the vote.

Sterling has steadied ahead of the release of the seat-by-seat prediction (more on this below), owing in large part to a YouGov poll for the Times out late on Tuesday that showed that the Conservatives continue to enjoy a lead of 11 points over their nearest rivals, the Labour Party. The rule-of-thumb is that any lead of over 10 points will give a comfortable majority to the front-runner.

In a poll conducted on November 25-26, the Conservatives polled on 43% (+1), Labour on 32% (+2), the Liberal Democrats on 13% (-3), The Brexit Party on 4% (+1) and the Greens on 2% (-2).

The poll does however confirm a trend being reported by other surveys: that Labour continue to steadily grow in popularity, and this will worry strategists at Conservative HQ who will be reminded of a similar trend in 2017 that ultimately saw Labour shrink a ~18 point deficit at the start of the campaign to just 2 points on voting day.

The Pound had been falling throughout Tuesday as markets saw the odds of a Conservative majority fall back following the release of a Kantar poll that showed the Conservative's lead had been slashed from 18 to 11 in just a week. Monday also saw the release of a poll by ICM for Reuters that showed the Conservative's lead over Labour had slipped to just 7%.

Memories of 2017 will remain fresh in the minds of foreign exchange traders, and they will therefore likely remain hesitant to engage in new sizeable bets on the Pound in such an atmosphere.

If momentum remains with Labour it increases the odds of a hung parliament where no one party secures an outright majority, but the YouGov result went some way in calming markets and the Pound has steadied from Tuesday's wobble.

The Pound-to-Euro exchange rate is quoted at 1.1667, having been as high as 1.1720 the day prior. The exchange rate is trading in the middle of a range that has been in place since the General Election campaign got underway. Robin Wilkin, a cross-asset strategist with Lloyds Bank says the exchange rate is towards the top of the current 1.1730/1.18 to 1.1561 range.

Wilkin expects the Pound to remain capped in this area, "and a broader range to develop into the general election".

The Pound-to-Dollar exchange rate is quoted at 1.2843, having been as high as 1.2904 the day prior. The exchange rate is towards the bottom of the range it has been trading since the start of the election campaign. "Prices continue to bounce around in a well-defined range between 1.2750/00 and 1.3000/25. Intra-day studies have moved back to neutral, after looking for prices to hold range lows yesterday. Further range trading is likely into the elections," says Wilkin.

Above: Sterling volatility vs. the Euro as it tracks the polls and expectations for the General Election outcome.

Sterling is currently tracking the odds of a Conservative majority: the currency spiked on Monday when those odds hit 70%, according to the Betfair Exchange. But, polling out on Monday and Tuesday meant these odds had slid back to 66%, and the Pound obliged and went lower as a result. "I don't expect the Labour Party's popularity to rise significantly over the coming weeks, while the Tories are still comfortably in the lead. Jeremy Corbyn is unlikely to succeed in creating an atmosphere of optimism. Thus, the UK pound remains undervalued," says Marc-André Fongern, G10 FX Analyst at MAF Global Forex.

"A hung parliament would prolong the uncertainty and once again raise the tail risks of both 'remain' and 'no deal'. We expect the heightened uncertainty would essentially reverse the recent inflows and push cable back to 1.25," says Michael Cahill, an analyst with Goldman Sachs.

David Bloom, Global Head of FX Strategy at HSBC, says a hung parliament would be the most damaging outcome for the Pound, while a small Conservative majority, what Bloom identifies as "the Theresa May thing", could also leave markets uncertain as to the political outlook.

A hung parliament could well prove that the Brexit question cannot be answered by a General Election, and a hung parliament might presumably not offer a clear route to a second referendum either.

Under such an outcome, "we are back in the mud," says Bloom, and Sterling then starts trading at roughly 1.20 (vs. the Dollar) because we don't know where to go, we don't know what to do, we're lost in the wilderness."

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All Eyes on YouGov's MRP

The MRP (multilevel regression and post-stratification) poll for this year's election will be published first by The Times newspaper at around 2200 GMT.

The MRP takes all existing YouGov data from the past seven days and models a seat-by-seat outcome, therefore it does not simply rely on a national sample. It is more granular, and therefore arguably more accurate.

The MRP shocked markets in 2017 by suggesting that Theresa May was unlikely to secure the majority she wanted, and many pundits expected, in the snap election she called to try and secure more seats in Parliament. When the campaign started May's Conservatives were polling with a lead of around 20 points, and expectations were high that she would secure a large majority.

The MRP poll was accurate in it suggested a hung parliament would in fact be the case.

Expect foreign exchange markets to pay particular attention to the poll release tonight: suggestions the UK is headed for hung parliament territory will unlikely sit well with the Pound.

"The market is likely to place great emphasis on the MRP poll, which was correct last time around," says Michael Brown, Senior Market Analyst at CaxtonFX. "GBP vulnerable if the model points to another hung Parliament, though should firm if Tory majority looks likely."

However, suggestions of a comfortable majority could well inject some upside impetus back into Sterling.

"Assuming the Conservatives do win a majority, we expect this to be a further positive for GBP, as it means both reduced political uncertainty as well as Brexit uncertainty," says Georgette Boele, an analyst with ABN Amro.

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