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Sterling – Volatile week ahead

Sterling recovered ground today after falling half a cent against the dollar in early Asian deals as traders reacted to another militant attack over the weekend in London ahead of Britain’s national election this week.

Saturday’s attack – the third in England in three months.

Sterling has wobbled over the past two weeks, with investors’ confidence that Prime Minister Theresa May would secure a landslide majority shaken by opinion polls predicting a wide range of outcomes for the June 8 snap election.

Polls have results ranging from a slim majority for May’s Conservative Party to a hung parliament – worrying investors who had bet a landslide win for May would translate into a stronger bargaining position in Britain’s exit talks with the European Union, which begin on June 19.

Besides awaiting further polls, investors were watching for a reading on the UK’s outsized services sector, with the Markit/CIPS services purchasing managers’ index A Reuters of economists predicts a reading of 55 for the index for May versus April’s 55.8. However, the reading came in at 53.8 much lower than expected.

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