Pound recovers ground after Tory U-turn on care

citywire-The pound has lifted off lows after the Conservatives mounted a U-turn over social care reforms that sparked a backlash in the polls. Sterling regained its footing above the $1.30 mark, making up all the losses incurred in the morning’s trading. Pound recovers Prime minister Theresa May said today a Conservative government would set an ‘absolute limit’ on the amount people pay for social care, after plans to include people’s homes included in means-testing were labelled a ‘dementia tax’. The manifesto pledge had proved unpopular, with two polls showing the Conservatives’ lead over Labour had fallen to single figures. A Survation poll found that the Tories’ lead had halved in a week, from 18% to 9, while a YouGov poll showed the same shrinking of the Conservatives’ lead to 9%. Survation’s poll showed 43% support for the Conservatives versus 34% for Labour, while 44% of respondents to YouGov’s survey backed the Tories, ahead of 35% for Labour. The news had sparked a slide in the pound in the morning’s trading.  ‘While a nine-point lead could still give Theresa May a comfortable victory on 8 June, the fact her lead has been slashed in half in just a few days may reinforce to financial markets that her victory is not a certainty,’ said Kathleen Brooks, research director at City Index. ‘With three weeks to go before the election, another bad PR week for prime minister May and her team and the Tories’ lead over Labour could fall further into low single figures, which could encourage sterling selling ahead of this crucial vote.’ The pound was had been weighed down by the dollar regaining some poise after last week’s heavy sell-off, its worst in 10 months. That followed s relief rally in US markets on Friday, with the Dow Jones and S&P 500 recovering some ground after being hit by the political turmoil surrounding US president Donald Trump, accused of trying to interfere with a federal investigation into former national security adviser Michael Flynn. ‘The US dollar has popped higher this morning after a severe sell-off last week,’ said David Madden, market analyst at CMC Markets UK. ‘The panic surrounding Trump’s presidency has seemed to cool slightly, but the story hasn’t gone away completely.’

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