Pound holds steady against US dollar after exit poll projects Labour landslide
5 July 2024, 02:00
The pounds has held steady against the US dollar after the general election exit poll projected a Labour landslide.
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Sterling was relatively flat against the US dollar, remaining around 1.276, and against the euro, holding at 1.18, after polling stations across the country closed at 10pm.
A large Labour majority had been widely expected and priced into financial markets, leading to a muted reaction for the pound.
Currency movements typically indicate the immediate reaction from financial markets to events that could have an impact on the political and economic landscape.
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Chris Beauchamp, chief market analyst at trading platform IG, said: "The exit poll has provoked little volatility in foreign exchange markets, as the expected Labour landslide is duly predicted.
"The stability that would be provided by such a win would mean investors can cross 'UK political risk' off their list of worries for the time being."
Economists for Investec Economics said a large Labour majority was "well trailed" by several opinion polls, hence the pound failing to "react virtually at all".
"What will matter more to markets, ultimately, is what a Labour government chooses to do if and when it takes office," Investec said.
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The exit poll suggests that Labour will take 410 seats - with a majority of 170.
It would mean a Labour prime minister in No10 for the first time since 2010.
Rob Wood, chief UK economist for Pantheon Macroeconomics, said: "If the final results approximately match the exit poll, Keir Starmer would have a large enough majority to plot a stable policy course, which should unlock more business investment and attract greater foreign investment."
However, he warned that higher government spending and borrowing, that is currently budgeted for, could slow down Bank of England policymakers in their path to cutting UK interest rates.
