The Pound Sterling (GBP) continued its upward trend on Friday following news that the Labour Party secured a substantial majority in the UK’s parliamentary elections, winning 410 out of 650 seats according to the BBC. This outcome marks a significant shift after 14 years of Conservative-led governance.
UK Prime Minister Rishi Sunak conceded defeat, acknowledging the Labour Party’s victory. “The Labour Party has won this general election and I have called Sir Keir Starmer to congratulate him on his victory,” said Sunak, who also secured his parliamentary seat in northern England, as reported by Reuters.
Derek Halpenny, head of FX research at MUFG Bank Ltd., suggested that a decisive Labour win could bolster the Pound Sterling by providing greater political stability through a strong mandate for governance.
In contrast, the US Dollar (USD) faced pressure from softer economic data, raising speculations about potential Federal Reserve (Fed) interest rate cuts in 2024. Focus remains on the upcoming US employment reports, expected to show a slowdown in job growth for June, with Nonfarm Payrolls (NFP) anticipated to rise by 190,000 jobs, down from the previous month’s 272,000.
Meanwhile, the Pound Sterling maintained its position around 1.2760 against the USD on Friday, with technical analysis indicating a consolidative pattern within a descending channel on the daily chart. The 14-day Relative Strength Index (RSI) suggests room for further upside, potentially challenging resistance near 1.2780 and aiming towards higher levels if breached.
Key support lies at the 21-day Exponential Moving Average (EMA) at 1.2701, with a break potentially leading to downside pressure towards the lower boundary of the channel around 1.2612.
The market continues to digest the implications of the UK election outcome and US economic data, influencing currency movements amid evolving global economic conditions.
Related Topics:
