FX round-up: Sterling plugs away to mixed Thursday as traders eye polls

Sterling plugged away to a mixed Thursday performance as traders uneasy about the upcoming UK general election and Brexit looked to polls for trading direction.

At 17:03 BST, sterling was down 0.02% to $1.2887, and was up 0.27% to €1.1495. It was up on the aussie, kiwi and yen, but down on the loonie and rand.

"Sterling in polls-land," was how Jasper Lawler, senior market analyst at London Capital Group, penned the currency's performance.

"With the election one week away, currency traders are placing more emphasis on the latest polls than economic data," he said.

The latest YouGov poll for The Times published overnight showed the Tory lead over Labour had narrowed to just three points.

This came hot on the heels of a projection by the pollster suggesting the Conservatives could lose as many as 20 seats, while Labour could gain 28, leading to a hung Parliament.

That -- if events played that way -- would leave May nine seats short of a majority.

"Investors avoided sterling during trading on Thursday," said Lukman Otunuga of FXTM.

That, the research analyst said, was "amid fears" of May "losing her grip on parliament" after the 8 June ballot.

"With the growing threat of a nightmare 'hung parliament' scenario likely to weigh heavily on sterling, further downside should be expected in the short to medium term," Otunuga said.

Meanwhile, the UK manufacturing purchasing managers' index from IHS Markit/CIPS slipped to 56.7 in May, from the three-year high of 57.3 in April. This was above consensus for 56.5.

"Another decent manufacturing report for the month of May saw decent gains in new orders as well as employment," said Michael Hewson, chief market analyst at CMC Markets UK.

"Rising prices remained a concern but they also showed further signs of easing back."

Turning to the US, the dollar-spot index was up 0.27% to $97.180. The greenback made gains on the euro, aussie, kiwi and yen, but fell on the loonie and rand.

This followed a bumper payrolls report from ADP for the month of May, which saw 253k new jobs added, a level that was above expectations for 177k. Weekly jobless claims edged up to 248k.

"As a bellwether for tomorrow's official payrolls report it could well rubber stamp the prospect of a move (by the US Federal Reserve) in June (to raise rates), but also raise expectations of a further hike as soon as September," said Hewson.

"The main puzzle for a lot of people given the number of jobs being added is the weak nature of wage growth which still remains lacklustre.