(Corrects to fix typographical error in headline)
* Lead of UK PM May's Conservatives drops in YouGov poll
* Sterling falters, down 0.5 pct on the day
* Aussie, Canadian dollar nurse losses after Thursday's drop
* Dollar index steady, clings to slight weekly gain
By Masayuki Kitano
SINGAPORE, May 26 Sterling fell on Friday after
a poll showed a narrowing lead for British Prime Minister
Theresa May over her opposition ahead of elections next month,
while weakness in oil prices dragged on commodity-linked
In a sign that the June 8 election could be more closely
contested than previously thought, a YouGov poll published on
Thursday showed that the opposition Labour Party had cut the
lead of May's Conservatives to five points.
Sterling fell 0.5 percent to $1.2884, pulling
further away from its May 18 peak of $1.3048, the pound's
strongest level since September last year.
The assumption that a landslide election win for May would
strengthen her hand over hard-line Brexiteers in her ruling
party and allow her to negotiate a smoother departure from the
European Union, had been a source of support for sterling.
That view, however, has been challenged by recent opinion
polls that showed a slide in the lead of the Conservatives.
The narrowing lead for May brings in the risk of a "messier
Brexit", said Stephen Innes, a senior trader for FX broker OANDA
"I think the pressure is on here. We could see a significant
move lower (in sterling) provided these uncertainties in the
polls persist," Innes said.
Commodity currencies remained wobbly as oil prices extended
falls after tumbling on Thursday, when OPEC and allied producers
extended output cuts but disappointed investors betting on
longer or larger supply curbs.
The Canadian dollar was last trading at C$1.3488
per U.S. dollar, down from a five-week high of C$1.3388
touched at one point on Thursday.
The Australian dollar fell 0.3 percent to $0.7431,
extending its drop after shedding 0.7 percent on Thursday.
With sterling and commodity currencies looking shaky, the
U.S. dollar gained a bit of respite.
Against a basket of six major currencies, the dollar held
steady at 97.282. For the week, the dollar index was
clinging to a slight gain of about 0.1 percent.
The greenback had been weighed down after the Federal
Reserve's minutes of the May policy meeting released on
Wednesday dialled down on some of the more hawkish policy
expectations in the market.
The dollar's underlying trend doesn't look very strong, said
Satoshi Okagawa, senior global markets analyst at Sumitomo
Mitsui Banking Corporation in Singapore.
Okagawa said that one message from the Fed minutes was that
the U.S. central bank is likely to take a gradual and flexible
approach to reducing its balance sheet.
"That has helped U.S. yields to settle down and has led to
weakness in the dollar," he added.
San Francisco Fed President John Williams told Reuters on
Thursday that the Fed would release details of its plans for
trimming its balance sheet "in coming months", adding that
balance sheet trimming should be gradual, and 'fundamentally' on
Against the yen, the dollar eased 0.3 percent to 111.51 yen
, staying below a one-week high of 112.13 yen touched on
The euro eased 0.1 percent to $1.1200, having backed
away from a 6-1/2 month high of $1.1268 set this week.
The common currency has enjoyed a bull run this month on
factors including an ebb in French political concerns and upbeat
euro zone data.
(Reporting by Masayuki Kitano; Editing by Shri Navaratnam)