Sterling sank to new five-year lows under $1.46 against its U.S. peer as uncertainty continued to intensify in the run up to the U.K. vote on May 7. With less than four weeks to go before the election that is considered too close to call, the pound will remain at risk of falling further out of favor.
Uncertainty over who will next occupy 10 Downing Street over the coming years and what policies they would pursue is considered a negative for the U.K. economy by crimping consumer and business confidence. To be sure, Morgan Stanley sees scope for sterling to fall below $1.40 before the end of June.
Key for sterling's prospects this week will be critical consumer inflation data on Tuesday, which is already running at a record low of zero, and unemployment figures on Friday.
