It is election week in the UK, and the BBC poll tracker puts Labour at 40%, Conservatives at 20%, Reform UK at 16% and Liberal Democrats at 11%, ING analyst Francesco Pesole notes.

GBP to continue relying on external drivers

“There has, indeed, been very little doubt about a Labour landslide win, so the election should not be a huge event for markets. We suspect that a stronger than expected result by populist/hard-Brexiteer Reform UK is the most tangible risk for some slight adverse reacting in GBP assets.”

“As widely discussed recently, the chances of the election result deviating the Bank of England (BoE) policy path are very low, and the Pound Sterling (GBP) should continue to rely on external drivers (both in EU politics and US macro) and key domestic data releases.”

“June CPI and jobs report aren’t published before 17-18 July, so even if we see expect a cut in August (market pricing 15bp) to hit the GBP, the case for a materially stronger EUR/GBP within the next couple of weeks is not very compelling.”