U.K. stocks declined for a second straight day on Tuesday, as investors remained cautious ahead of the U.K. general election on Thursday, as polls point to an increasingly tight race.
The FTSE 100 index UKX, -0.28% fell 0.2% to 7,510.19, building on a 0.3% loss from Monday.
The slight pullback came as traders geared up for closely watched events later in the week. On Thursday, British voters head to the polls, the European Central Bank holds its meeting, and former Federal Bureau of Investigation Director James Comey will testify to a Senate panel about alleged Russian interference in U.S. affairs.
“The U.K. election remains the standout event for most, with the outcome being so important for Brexit negotiations over the next couple of years,” said Craig Erlam, senior market analyst at Oanda, in a note.
“The Conservative lead over Labour has collapsed, if the polls are to be believed, and it seems that the only thing that [U.K. Prime Minister] Theresa May currently has on her side now is time, with Labour still having a lot to do and only two days in which to achieve it,” he added.
A poll released late Monday by Survation put May’s Conservative Party one point ahead of opposition Labour, down 16 points from a month ago. The Telegraph’s poll tracker has the Tories ahead by 7 points, compared with a lead of more than 20 points in April.
The pound GBPUSD, +0.1008% held up surprisingly well on Tuesday, shaking off the latest election jitters. Sterling bought $1.2933, up from $1.2903 late Monday in New York.
“Whether this reflects a lack of faith in the polls or just those that point to a much tighter race isn’t clear, but there doesn’t appear to be much election risk being priced in, which in itself concerns me given what’s happened previously,” Erlam said.
The U.K. currency has in recent weeks traded at the mercy of opinion polls, sliding on signs May’s Tories are losing voters’ support.
EasyJet PLC EZJ, +1.04% added 1.2% after the budget airline said passenger traffic rose 9.5% in May.