Betting that she would win a strong majority, May called the snap election to strengthen her position at home as she embarked on complicated Brexit negotiations with 27 other members of the European Union.
In stark contrast to opinion polls that have until the past week shown May on course for a big win in the snap election she called, the YouGov model suggested May would lose 20 seats and her 17-seat working majority in the 650-seat British parliament.
But that plan could backfire - Labour Party leader Jeremy Corbyn has been successfully focusing his campaign on domestic policy rather than Brexit.
The findings again weakened sterling GBP=D4 which had earlier fallen nearly a cent against the USA dollar on the YouGov model before rising on a Kantar poll which showed May's lead had increased to 10 percentage points.
"We're getting very negative on sterling again", said George Saravelos, FX strategist at Deutsche Bank.
Sensing the momentum, Corbyn made a last-minute decision to attend a live television debate Wednesday with other party leaders - and challenged May to join him.
But unless she handsomely beats the 12-seat majority her predecessor David Cameron won in 2015, her electoral gamble will have failed, and her authority could be undermined just as she enters formal Brexit negotiations.
"The current pricing is for a majority of more than 100, so I think the knee-jerk reaction to one of 50-100 (seats) would be lower".
Sterling was up almost 0.2% at $1.2855 by 0852 GMT. Smaller parties, including the Scottish National Party and Northern Irish parties, could win 83 seats, The Times newspaper quoted YouGov as predicting. "A hung parliament would in more normal circumstances be viewed as quite a negative for sterling", analyst Paul Meggyesi said in a note distributed to media on Tuesday and sent to clients at the end of last week.
If the Conservatives were still the largest party, they might try to form a coalition with the Liberal Democrats, as they did in 2010.
While the latest polls confirm the narrowing trend, they still show May's Conservatives with a solid lead, leaving some such as MUFG currency strategist Lee Hardman, keeping their bets in place. "Under this scenario, we'd suggest the risks are to GBP/USD possibly touching $1.10", Citi said earlier this month.