Sterling hits multi month highs after general election is called

Sterling edged up to multi-month highs following UK Prime Minister Rishi Sunak's surprise announcement of a general election on July 4th. The Pound also responded to figures showing that inflation did not slow as much as forecast in April.

British consumer prices rose by 2.3% year-on-year in April, nearing the Bank of England's 2% target but slowing less than anticipated. Against the US Dollar, GBP reached a two-month high before settling slightly lower at $1.2729, while against the Euro, it hit a three-month high, peaking at 1.1747.

Despite the surprise announcement of the general election, analysts do not expect it to significantly impact the Pound's direction. The Conservative party is currently trailing by 20 percentage points in public opinion polls and is recovering from devastating local election results.

The last significant political event that impacted the Pound's value was during Liz Truss's tenure as Prime Minister. Her proposed tax cuts led to a substantial devaluation of the Pound and ultimately shortened her time in office.

Currency markets are currently pricing in an interest rate cut at the Bank of England's September meeting, though some analysts are also predicting a cut in August.

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