As a new poll suggested that Theresa May may not win a majority in the upcoming election, the media rushed to highlight the effect of the news on the pound. But people were quick to declare the story ‘fake news’, and an attempt to scaremonger voters.
A new seat-by-seat prediction by YouGov suggests [paywall] that the Conservatives might win 310 seats at the election. This is short of the 326 seats needed to form a majority government.
In response, several media outlets reported the way the pound had dropped at the news of a potentially hung parliament. The Financial Times released a story accompanied with a graph, stating [paywall]:
The pound fell sharply on the heels of a YouGov model showing that the Conservative party could lose 20 seats in the upcoming election.
It also issued this tweet, stating: “A new UK election model shows Theresa May’s Conservatives losing 20 seats in the vote. Here’s how the pound reacted.”
— Financial Times (@FT) May 30, 2017
At first glance, the graph shows a drastic dip at the time of the announcement — enough to scare many potential voters. But on closer inspection, the dip, while dramatic, is actually less than 1%. Likewise, it is around the same level it was at 10pm the previous night. Furthermore, according to recent figures and at the time of writing, the pound is now back to 1.284.
Many people were quick to highlight how misleading the graph was:
Fake news! The pound's reaction has been tamer than pretty much any person who's talking about the poll
— Joshua Loftus (@joftius) May 30, 2017
Oh no, not fractions of a cent…
— strong belwas (@Milktoasted) May 30, 2017
The ‘Tory Fibs’ account also pointed out:
Pound up as Labour goes up
When put in context, the graph is even more misleading. On 17 April, it was announced that the Conservatives were further ahead of Labour in the polls than they have been at any point in almost a decade, with a 21-point lead. Since then, Labour has been cutting the opposition’s lead, with some polls suggesting the Conservatives now only have a six-point lead. There is no sign yet of this trend halting or reversing. And yet the pound has actually been improving against the dollar.
One graph from MoneyWeek shows the GBP/USD rate from April to May:
Likewise, as another Twitter user pointed out, the context is a pound that has actually been declining over the last two years, while the Conservatives have been in power.
— 𝕮𝖍𝖗𝖎𝖘𝖙𝖎𝖓𝖆 𝕵𝖊𝖓𝖓𝖎𝖋𝖊𝖗 BSc. (@crifferius) May 31, 2017
While this is down to several factors, including Brexit, it goes to show how important it is to understand context when looking at eye-catching graphs like the one from The Financial Times.
Yet another lesson in not just believing what we’re told without close analysis.
– Go out and vote on 8 June. And encourage others to do the same.
– Discuss the key policy issues with family members, colleagues and neighbours. And organise! Join (and participate in the activities of) a union, an activist group, and/or a political party.
– Read more from The Canary on the 2017 general election.
– Read and support independent news outlets that hold the powerful to account. Here are some we recommend. Please add more that you like in the comments:
The Canary, Media Diversified, Novara Media, Corporate Watch, Common Space, Media Lens, Bella Caledonia, Vox Political, Evolve Politics, Real Media, Reel News, STRIKE! magazine, The Bristol Cable, The Meteor, Salford Star, The Ferret.
We need your help ...
The coronavirus pandemic is changing our world, fast. And we will do all we can to keep bringing you news and analysis throughout. But we are worried about maintaining enough income to pay our staff and minimal overheads.
Now, more than ever, we need a vibrant, independent media that holds the government to account and calls it out when it puts vested economic interests above human lives. We need a media that shows solidarity with the people most affected by the crisis – and one that can help to build a world based on collaboration and compassion.
We have been fighting against an establishment that is trying to shut us down. And like most independent media, we don’t have the deep pockets of investors to call on to bail us out.
Can you help by chipping in a few pounds each month?