Sterling resilient as Labour wins dramatically
July 5 (Reuters) -The UK election is unfolding as predicted by the polls, with Keir Starmer's Labour Party set to win a massive majority. Starmer's views are centre-left and his team is perceived as a safe betafter the political turbulence experienced in recent years under successive Conservative administrations.
Labour'spolicies will be unveiled at the Autumn Statement.A surge in annual debt interest payments, rising health and defence spending, the cost of cutting greenhouse gas emissions and the effects of an ageing population suggest Starmer will need to raise money to fulfilelection commitments.
Preserving investor trust while dealing with the slew of economic challenges will be a difficult task.
LSEG's 0#BOEWATCH shows a 56.7% chance of a quarter-point Bank of England rate cut on Aug 1, little changed from Thursday aftera BoE survey of employer wage expectations fell. Upcoming data and comments from the new government will drive the finely balanced decision, which will be key for sterling.
Technically, GBP/USD daily momentum studies climb as Bollinger bands contract and 5, 10 and 21-day moving averages coil - daily and weekly charts show no strong bias, as sterlingconsolidates at a three-week high.
Wednesday's 1.2679 low and last week's 1.2613 base are initial support, while this week's 1.2776 high and the 1.2859 June top are the first resistance.
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Andrew Spencer is a Reuters market analyst. The views expressed are his own. Editing by Sonali Desai
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