Polls show further tightening ahead of Thursday's UK election

Theresa May's Conservatives are likely to fall short of a parliamentary majority in Thursday's general election, according to the latest opinion polls.

A YouGov constituency model published on Tuesday calculated the Tories would win a 42% share of the vote and 304 seats in the election, which was likely to be 22 seats short of a majority, up from 21 seats on the previous day's poll.

The Labour party will win a 34% share of the vote, YouGov calculated, and 266 seats out of the total 650.

The Liberal Democrats were ascribed 12 seats, with the SNP 46, Plaid Cymru two and the Greens one, with 18 for Northern Ireland and two independents.

A Survation poll for ITV out overnight showed the Tories just one point ahead of Labour, compared to a six-point lead a week ago.

Survation's latest count showed the Tories down two points to 41.5% and Labour climbing three to 40.4%.

The poll was conducted on Friday and Saturday, before the London Bridge attack later that evening by Islamist militants that killed seven people and put more than 40 in hospital.

Bookmaker Betfair had the Conservatives as its 1/10 favourite to win most seats on Tuesday versus Labour at 9/1, with May's party at 1/4 to win an overall majority, with 50-74 seat advantage at 5/1 and no overall majority at 9/2.

The bookie has taken around £35m across all general election markets on its betting exchange and estimates a late betting frenzy will see this top £60m by the time of the result, making it the third biggest political betting event in the company's history behind the £250m taken on the 2016 US presidential election and £127m for the Brexit referendum.

Sterling was holding up on Tuesday, trading up more than 0.1% against the euro and dollar at €1.1483 and $1.2919.

Analysts said that the financial calendar was largely devoid of major releases, leaving the focus firmly on Thursday’s blockbuster schedule, where the UK election coincides with a testimony of former FBI chief James Comey in Washington.

"UK election polls have been widely conflicting of late, reflecting the significant impact different methodology has upon results. Previously we have seen the pound fall with any mention of a hung parliament, yet with the pound rising gradually over recent weeks, it is clear that the markets continue to foresee a Tory majority," said Joshua Mahony, a market analyst at IG.

With the Survation and YouGov polls the latest in a long line of tightening polls ahead of Thursday’s election, he added: "While the financial markets see things a lot more clearly, there is no doubt that the contest is looking a lot more unpredictable than when Theresa May called the election.

"With Labour seemingly happy to target the financial sector as the enemy of the ‘common person’, there is a fear within the city that a Corbyn win would be disastrous for the post-Brexit hopes of the financial sector."

Some strategists, notably including those at JPMorgan, have in recent weeks suggested a strong Labour performance would be the best result for the UK as a coalition of center-left parties would lead to a “soft” Brexit, which might be better for the UK economy and its currency.

London Capital Group analyst Ipek Ozkardeskaya said on Tuesday: "The GBPUSD remains well bid ahead of the UK’s snap election due on Thursday, although most of the pound’s strength is certainly due to the broad based weakness in the US dollar.

"The short-term volatility in pound is attention-grabbing and should prevent cable from any major directional move before the result of the election."