COMMENT-Labour could work for pound after UK election

Sterling may benefit if the business-friendly Labour Party wins a parliamentary majority in Britain's general election on July 4, as opinion polls suggest, with scope for GBP/USD to rise to 1.30 for the first time since July 2023.

Keir Starmer's opposition Labour Party currently leads Prime Minister Rishi Sunak's Conservatives by around 20 percentage points in the opinion polls - a lead which would secure Labour a big majority if replicated on polling day.

The expectation that Labour will win well over half of the 650 seats is highlighted by betting odds from bookmakers. Ladbrokes quotes 1/7 for a Labour majority, odds which equate to an 88% probability, 5/1 for a hung parliament (no single party with overall control) and 25/1 for a Tory majority.

A hung parliament shock could negatively impact the pound if it led to the formation of a minority Labour administration reliant upon the Scottish National Party (SNP) to govern as the price of SNP support would most likely be a second independence referendum for Scotland.