Pound gains on dollar as Britons vote in national election
By Alun John
LONDON, July 4 (Reuters) - The pound gained on Thursday against a broadly weaker dollar which was hurt by soft U.S. economic data, as Britons voted in a parliamentary election that investors hope will bring some stability to British politics.
Opinion polls show Keir Starmer's centre-left Labour Party on course for a landslide victory over Prime Minister Rishi Sunaks's Conservatives, who have led the country for 14 often turbulent years.
The pound was up 0.1% against the dollar at $1.2755 on Thursday, having gained 0.46% Wednesday after soft U.S. economic data sent the dollar lower across the board. GBP=D3 FRX/
The pound has spent most of 2024 down slightly against the dollar - while outperforming other major currencies - though Wednesday's dollar weakness meant sterling was last up 0.23% against the dollar this year.
"It was also the second best performing G10 currency last year, but you have to bear in mind that in September 2022 it was at its weakest ever, so if you look at sterling now it is not a strong currency but it has recovered from a very low base," said Jane Foley, head of FX strategy at Rabobank.
The pound's recovery has been underpinned by Britain's better-than-feared economic performance, the Bank of England's cautious attitude to rate cuts relative to European peers, with hopes that a comfortable election win for Labour will usher in greater political and economic stability also in the mix.
"If investors carry on believing that significant tax increases are not likely, that the Labour Party wants to stimulate growth by convincing investors to come back to the UK, we could see a moderate rally for the pound," said Foley.
If Labour wins a very large majority, however, "there may be a little bit of concern pushing into markets" that this could bring "more left-wing policies to the fore with little opposition", she added.
Versus the euro the pound was steady at 94.68 pence to the common currency. EUGBP=D3
The pound has outperformed peers against the dollar in 2024 https://reut.rs/4eDwESq
Reporting by Alun John
Editing by Gareth Jones
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