Pound rises after Labour’s landslide victory in UK general election

The pound ticked up slightly against the euro (GBPEUR=X) and dollar (GBPUSD=X) on Friday morning in London, heading higher as Keir Starmer’s Labour party were elected to government.

Sterling was trading at $1.27, up around 0.1% before the opening bell in London. It was almost flat against the euro, trading at almost 1.18.

As results continued to trickle in, Labour won 410 seats to the incumbent Conservative government’s 119. Prime minister Rishi Sunak has now conceded defeat.

Labour’s election victory has been anticipated for weeks, as the party pulled more than 20 points ahead in some polls during campaigning. The muted reaction of sterling reflects the fact that there were few big surprises as counts trickled in on Thursday night, going into Friday.

The pound has ticked up since the election was called, and is the strongest-performing major currency agains the dollar this year — gaining 0.3%, according to Reuters.

Read more: What Labour winning the election would mean for workers

“The change in leadership from the Conservative party to the Labour party after a decade has made investors optimistic that finally we will have someone who can actually heal some of the self-inflicting injuries like Brexit and bring the economy back on track,” said Naeem Aslam, chief investment officer at Zaye Capital Markets.

“This is due to the fact that the Conservative party primarily enriched the wealthy, while the rest of the nation saw their disposable income rapidly diminishing.”

Sterling is now back to levels seen in 2016 on a trade-weighted basis, reflecting the view among analysts that the UK’s currency is heading out of the post-Brexit period of volatility.

The FTSE 100 (^FTSE) also ticked about 0.5% higher on Friday morning, while the more domestically-focused FTSE 250 (^FTME) hovered as markets opened.

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