There is a lot of excitement today about the possibility of a hung parliament — and Sterling has dropped accordingly. You can never read too much into a single poll — see UK Polling Report. A quick look at the YouGov poll history chart shows Conservative support resting on the support level of 37 with Labour testing the resistance level at 35-36. I am wondering whether to trade against the spike on this Labour chart by taking profits on my short GBP/USD position. The reason to wait is that, as with the euro’s recent weakness, the problem is political and political problems tend to take a while to solve — in this case at least until the election.

Short UK is my main position at the moment. I have bet on Gilts declining further. As far as EUR/USD is concerned, I have been thinking since last week that a relief rally could be more likely in the EUR than any further falls.