Labour Victory Could Light Up the Pound – Saxo’s Take
When the 2025 General Election wraps up, the way the stakes play out in the UK’s currency is a hot topic for Saxo’s FX gurus. They’re betting that a solid Labor win could give the pound a lift, while a Tory win or a split‑ticket hung Parliament might just unplug that steady vibe.
GDP In the Cold – ONS Surprises Rishi Sunak
The Office for National Statistics knocked the headline: April 2025 GDP was flat. No growth. No shame. The UK went from a 0.4% increase in March to a “zero‑moment” in April – a roughish jab at Prime Minister Rishi Sunak who’s been bragging about a “better economy” under his Conservative banner.
Labour’s “Positive” Hope
Charu Chanana, Saxo’s Head of FX, says a clear majority for Labour would keep the pound “rock‑solid” – and could even smooth EU‑UK relations during a time when the euro is acting more like a toddler with free‑range confidence. If the clay between the UK and the EU is laid down with a bit more care, the pound could stand its ground.
But she also warns that a Conservative win or a minority Labour party might give investors a sense that the policy framework is shaky. “We could see a volatile tilt against the pound,” she cautions. That’s the underwriting of risk that traders need, but it may also call for some careful stepping.
Current Resilience – Yet Extra Pushback Expected
Despite the challenges, the British pound has been the “most resilient” currency in G10 so far this year. Yet, as the election clock ticks towards July 4th, the question of “further pushback” looms large. Can the pound keep up its strength or will it crumble at the front of the G10’s dance floor?
Peter Garnry’s Tax‑Cut Warning
From the equity side, Peter Garnry points out that “tax cuts” could stir a second run‑away on sterling, reminiscent of the 2022 mini‑budget panic during Liz Truss’s tenure. “Unfunded tax cuts destabilize the market,” he says, echoing the swing‑backs that rattled UK gilts and shook pensioners’ confidence.
Garnry’s words echo a familiar lesson: a big tax push-without backing can send the markets into a frenzy. That’s a story of volatility we’ve all heard too many times.
What Does All This Mean for the Market?
There are plenty of hats to wear – a Labor “opportunity” society lineup feels oddly refreshing, but the thin line of a “weak policy framework” could thin out the pound’s glory. The excitement around an election may keep the pound handful of cautious players stepping on the hedge fund and retail rails.
Meanwhile the steady pace of Fed easing expectations might soak away some of that shine, as the market weighs election uncertainties. And honestly, the pound isn’t the only currency on the dance floor. You can see the old US dollar humming along, signature with minted hallmarks.
Take the Party With You – Let’s Thank the Open Market!
What’s your take? Keep an eye on the pound – it’s more exciting than any election’s “tussle.” That’s how you swing through the markets in a way that’s in tune with your personal sense of certainty. Happy trading!
