If there is a huge problem trusting opinion polls, then there is an even bigger one trusting the markets. But they are different. The trouble with polls is that they have to work on too little information. The trouble with markets is that they have too much.

You can see this in the past few days. The gap between the two parties has clearly narrowed and that will alter the likely result of the general election. Unless the gap widens again, which it may, instead of there being a huge Conservative majority there will be a smaller one, conceivably none at all. But it is not very helpful to say that, because the range of outcomes is too wide. You can’t buy or sell a currency or a share on the basis of the polls – for as we saw, one poll that suggested there might be a hung parliament did knock the pound for a bit, but it swiftly recovered.

There are many problems with political polling, which include the difficulty of getting a representative sample with a relatively small budget, the evidence that people lie (why tell a stranger what you are going to do when anonymity is a key element of democracy?), the complexity of the constituency system (or in the US the electoral college) and so on.

UK General Election 2017 Show all 47 1 /47 UK General Election 2017 UK General Election 2017 12 June 2017 British Prime Minister Theresa May leaves 10 Downing Street for the 1922 committee on June 12, 2017 in London, England. British Prime Minister Theresa May held her first cabinet meeting with her re-shuffled team today Getty Images UK General Election 2017 12 June 2017 DUP leader Arlene Foster stands alongside deputy leader Nigel Dodds as they hold a press conference at Stormont Castle as the Stormont assembly power sharing negotiations reconvene following the general election on June 12, 2017 in Belfast, Northern Ireland. Discussions between the DUP and the Conservative party are also continuing in the wake of the UK general election as Prime Minister Theresa May looks to form a government with the help of the Democratic Unionist parties ten Westminster seats. Stormont and the political situation in Northern Ireland has been in limbo following the collapse of the power sharing executive due to the Renewable Heat Incentive scheme scandal which implicated the DUP Getty Images UK General Election 2017 12 June 2017 Priti Patel, International Development Secretary leaves 10 Downing Street Getty Images UK General Election 2017 12 June 2017 Larry the Downing Street cat runs ahead of Michael Fallon Britain's Secretary of State for Defence as he arrives for a cabinet meeting at Downing Street in London, Britain, June 12, 2017. REUTERS/Stefan Wermuth REUTERS UK General Election 2017 12 June 2017 Michael Gove, Environment Secretary leaves 10 Downing Street on June 12, 2017 in London, England. British Prime Minister Theresa May held her first cabinet meeting with her re-shuffled team today Getty Images UK General Election 2017 12 June 2017 Scottish National Party Leader Nicola Sturgeon (C) leaves after speaking to the media in Parliament Square. Getty Images UK General Election 2017 12 June 2017 British Prime Minister Theresa May (C, L) holds the first Cabinet meeting of her new team. Getty UK General Election 2017 11 June 2017 British Prime Minister Theresa May attends church in her constituency with her husband Philip May, a few days after disappointing results in a general election. Rex Features UK General Election 2017 9 June 2017 Leader of the Labour Party Jeremy Corbyn leaves Labour Party HQ this morning, following a general election yesterday. Parliament is hung, with no individual party gaining an overall majority. Post general election reaction. Rex UK General Election 2017 9 June 2017 BELFAST, NORTHERN IRELAND - JUNE 09: DUP leader and Northern Ireland former First Minister Arlene Foster (C) holds a brief press conference with the DUP's newly elected Westminster candidates who stood in the general election Getty Images UK General Election 2017 9 June 2017 A " Get May Out" demo took place opposite the gates of Downing Street, calling for May to resign, after the shock election results and Mays coalition with the DUP. Rex Features UK General Election 2017 9 June 2017 A demonstrator wears a mask depicting Britain's Prime Minister and leader of the Conservative Party Theresa May, poses with a mock gravestone bearing the words "Hard Brexit, RIP", during a protest photocall near the entrance 10 Downing Street in central London AFP/Getty Images UK General Election 2017 9 June 2017 Britain's Prime Minister Theresa May arrives at the Conservative Party's headquarters in London Reuters UK General Election 2017 9 June 2017 Britain's Prime Minister and leader of the Conservative Party Theresa May flanked by her husband Philip delivers a statement outside 10 Downing Street in central Londo Getty UK General Election 2017 9 June 2017 Britain's Prime Minister and leader of the Conservative Party Theresa May leaves Buckingham Palace in London the day after a general election in which the Conservatives lost their majority Getty Images UK General Election 2017 9 June 2017 A TV cameraman watches the door of 10 Downing Street in London Getty Images UK General Election 2017 9 June 2017 Labour leader Jeremy Corbyn is greeted by his Office Director Karie Murphy as he arrives at Labour Party HQ in Westminster, London, after he called on the Prime Minister to resign, saying she should 'go and make way for a government that is truly representative of this country' Dominic Lipinski/PA Wire UK General Election 2017 9 June 2017 Britain's Prime Minister Theresa May arrives at the Conservative Party's headquarters with her husband Philip in London REUTERS/Peter Nicholls UK General Election 2017 9 June 2017 Ukip leader Paul Nuttall speaks during a press conference at Boston West Golf Club where he announced that he is standing down as party leader Joe Giddens/PA UK General Election 2017 9 June 2017 Ruth Davidson, leader of the Scottish Conservatives, leaves the counting centre for Britain's general election with her partner Jen Wilson in Edinburgh, Scotland REUTERS/Russell Cheyne UK General Election 2017 9 June 2017 Scottish Labour leader Kezia Dugdale celebrates with candidate for Edinburgh South Ian Murray as he retains his seat at the Meadowbank Sports Centre counting centre in Edinburgh, Scotland Getty Images UK General Election 2017 9 June 2017 First Minister Nicola Sturgeon speaks to the media at the Emirates Arena in Glasgow, as counting is under way for the General Election Andrew Milligan/PA Wire UK General Election 2017 9 June 2017 Scottish Conservative leader Ruth Davidson at Meadowbank Sports Centre in Edinburgh, as counting is under way for the General Election PA UK General Election 2017 9 June 2017 Scottish National Party (SNP) leader Nicola Sturgeon reacts at the Emirates Arena in Glasgow, Scotland EPA UK General Election 2017 9 June 2017 Jeremy Corbyn, leader of Britain's opposition Labour Party, arrives at the Labour Party's Headquarters in London REUTERS/Marko Djurica UK General Election 2017 9 June 2017 UKIP Leader Paul Nuttall leaves in a car following the vote count for the constituency of Boston and Skegness in Boston, England Anthony Devlin/Getty Images UK General Election 2017 9 June 2017 British Prime Minister and Conservative Party leader Theresa May speaks at the declaration at the election count at the Magnet Leisure Centre in Maidenhead, England. Getty Images UK General Election 2017 8 June 2017 A policer officer enters a polling station in London AP UK General Election 2017 8 June 2017 A woman leaves after casting her vote at the Hove Museum and Art Gallery near Brighton, in southern England Getty UK General Election 2017 8 June 2017 A polling station sign is seen on a telephone box outside the polling station at Rotherwick Hall, west of London Getty UK General Election 2017 7 June 2017 A woman walks past a general election display in the window of a betting shop in Camden on June 7, 2017 in London, United Kingdom. Britain goes to the polls tomorrow, Getty Images UK General Election 2017 7 June 2017 Britain's Prime Minister Theresa May visits Atherley Bowling Club during an election campaign visit on June 7, 2017 in Southampton, England. Britain goes to the polls tomorrow June 8 to vote in a general election. Getty Images UK General Election 2017 6 June 2017 A supporter wears a pair of Jeremy Corbyn decorated tights at a general election campaign event in Birmingham, central England, on June 6, 2017. Britain goes to the polls on June 8 to vote in a general election only days after another deadly terror attack in the nation's captial. AFP/Getty Images UK General Election 2017 6 June 2017 A picture taken in London, shows election leaflets from various parties displayed ahead of the United Kingdom's general elections. Britain goes to the polls on June 8 to vote in a general election only days after another terrorist attack on the nation's capital AFP/Getty Images UK General Election 2017 6 June 2017 Election workers, George Gaunt and Luca Tragid deliver the first ballot boxes, on the Royal Mile in Edinburgh AFP UK General Election 2017 6 June 2017 British Prime Minister Theresa May meets with Conservative party supporters during an election campaign visit to a bakery during an election campaign visit on June 6, 2017 in Fleetwood, north-west England. Britain goes to the polls on June 8 to vote in a general election only days after another terrorist attack on the nation's capital Getty Images UK General Election 2017 5 June 2017 British Prime Minister Theresa May speaks during a general election campaign visit to a removals depot in Edinburgh AFP/Getty Images UK General Election 2017 3 June 2017 Pro-Independence supporters hold a march through Glasgow AFP/Getty Images UK General Election 2017 3 June 2017 Opposition Labour Party leader Jeremy Corbyn campaigns for the upcoming general election in Beeston, Nottinghamshire AFP/Getty Images UK General Election 2017 3 June 2017 Labour leader Jeremy Corbyn reacts to supporters after a rally at Beeston Youth and Community Centre as he visits the East Midlands during the final weekend of the General Election campaign on June 3, 2017 in Nottingham, England. If elected in next week's general election Mr Corbyn is pledging to create a million new jobs and to scrap zero-hours contracts Getty Images UK General Election 2017 1 June 2017 Scottish Conservative and Unionist Party leader Ruth Davidson joins a selection of Scottish Conservative election candidates and activists during campaigning on May 1, 2017 in South Queensferry, Scotland. With only seven days to go until the general election on June 8th, polls are showing the SNP out in front and the Conservatives set to close in on Labour. Getty Images UK General Election 2017 29 May 2017 Prime Minister Theresa May canvasses in Richmond with Conservative candidate Zac Goldsmith on May 29, 2017 in London, United Kingdom. After suffering defeat in the London Mayoral election Zac Goldsmith resigned over the Government's position on Heathrow expansion. He stood as an Independent but lost in a by-election to the Liberal Democrats. Britain goes to the polls on June 8 to elect a new parliament in a general election Getty Images UK General Election 2017 22 May 2017 Liberal Democrat leader Tim Farron poses for a selfie taken by carer April Preston during a General Election campaign visit to the Barlow Medical Centre, in Didsbury, Manchester Yui Mok/PA UK General Election 2017 22 May 2017 Britain's Prime Minister Theresa May speaks at an election campaign event in Wrexham, Wales Reuters UK General Election 2017 22 May 2017 Britain's main opposition Labour Party leader Jeremy Corbyn, and Labour's former deputy Prime Minister, John Prescott, exit the party's general election campaign 'battle' bus as they arrive at an event in Kingston upon Hull, northern England Getty Images UK General Election 2017 22 May 2017 Britain's main opposition Labour Party leader Jeremy Corbyn walks with supporters between venues, before speaking again at another general election campaign event in Kingston upon Hull, northern England Getty Images UK General Election 2017 22 May 2017 An anti-fox hunting protester is taken away and arrested by police outside the venue where Britain's Prime Minister Theresa May was due to launch the Welsh Conservative general election manifesto at Gresford Memorial Hall in the village of Gresford, near Wrexham, North Wales, on May 22, 2017. Britain goes to the polls on June 8 to elect a new parliament in a general election AFP/Getty Images

Pollsters have to make an intuitive guess at what the numbers are really saying, and often their intuition turns out to be wrong.

But the markets are the other extreme. Instead of there being a handful of boffins sitting in an office peering at the data that has been collected for them, they are the result of millions of people, conceivably hundreds of millions, around the world making what are sometimes tiny decisions. Some people spend their lives working in markets. Others do it occasionally and unwittingly. Do you buy your holiday currency now or wait until August? That has a miniscule impact on the exchange rate. Among those millions are virtual people, computers, told to respond in some way or other by a maths PhD working for a financial institution.

Huge, unbelievably huge, resources are thrown at making market decisions. So why are they sometimes so dopey? I think the best answer to that is that they are moved by mood rather than reality.

Many years ago as a young journalist I worked with a leading polling company trying to analyse what a set of financial institutions thought would happen on the markets in the coming week. We polled each of them, measured their expectations, and then fed back anonymously the results. The idea was that they would then have a rational expectation of how markets might move, which they could then act upon.

It didn’t work. Or rather it did work but only told people what the markets were already doing. It had no predictive benefit so it was, in practice, useless. No-one knows how markets will move, and mathematical models (or opinion polls) that try to predict movements have failed to do so. We are back to intuition rather than reason.

General Election polls and projections: May 31

If markets cannot predict how the sterling-dollar rate will go, they certainly cannot predict the outcome of a general election. All they can do is measure the mood of the moment. They know everything that is to be known in the sense that all the information that is available goes into the price. Their purpose is different. It is not to predict, but simply to align the expectations of interested parties. In finance it is matching supply and demand. In politics it is matching the different expectations of anyone trying to predict what will happen.