An exit poll conducted on Thursday has projected Keir Starmer and the Labour Party to secure a significant victory in the UK parliamentary election, signaling an end to 14 years of Conservative-led government. The poll forecasts Labour to clinch 410 seats in the 650-seat parliament, marking a historic shift in UK politics.
Sterling remained stable in anticipation of the Labour victory, trading around $1.2758 and 84.74 pence per euro just before the exit poll results were announced. Financial markets had already factored in expectations of a Labour government with strong parliamentary support for its centre-left policies.
Commenting on the anticipated political and economic stability under Labour, Cathal Kennedy, Senior UK Economist at RBC Capital Markets in London, highlighted the party’s commitment to preserving the Bank of England’s independence and maintaining a 2% inflation target.
The exit poll results also suggested Rachel Reeves, expected to be appointed Chancellor of the Exchequer, is unlikely to implement an immediate fiscal event post-election. This stance underscores Labour’s strategy to maintain transparency in public finances through the Office of Budget Responsibility.
Lindsay James, Investment Strategist at Quilter Investors, noted minimal market reaction due to prior anticipation of a Labour victory. James emphasized that amid global political uncertainties, the UK’s potential under a stable Labour government could appeal to investors seeking a predictable business environment.
Michael Brown, Senior Research Analyst at Pepperstone in London, highlighted that the election outcome aligned closely with market expectations set at the campaign’s outset. He cautioned on Labour’s ambitious fiscal plans given limited fiscal headroom, suggesting potential challenges in achieving projected GDP growth targets.
Francesco Pesole, Currency Strategist at ING in London, observed that despite minor deviations from seat projections, market response indicated confidence in a Labour-led government’s ability to manage economic policies effectively. Pesole expressed cautious optimism regarding Labour’s economic growth ambitions amidst fiscal constraints.
Chris Beauchamp, Chief Market Analyst at IG in London, noted the exit poll’s confirmation of a Labour landslide did not significantly impact FX markets, attributing this stability to pre-existing market sentiments. He highlighted the potential removal of UK political risk as a positive factor for investor confidence.
Fiona Cincotta, Senior Markets Analyst at City Index in London, remarked on the absence of surprises in the election results, reinforcing market stability and anticipated policy continuity. Cincotta underscored the limited scope for drastic fiscal policy changes, suggesting a period of relative stability for the Bank of England.
Kenneth Broux, Head of Corporate Research FX and Rates at Societe Generale in London, commented that while Labour’s projected majority fell within expected ranges, the outcome reaffirmed investor expectations without altering sterling’s positive sentiment.
Colin Asher, Senior Economist at Mizuho in London, noted Labour’s slightly underwhelming performance compared to recent polls but emphasized their substantial majority’s significance. Asher cautioned on the challenges ahead in meeting public expectations amidst constrained fiscal resources.
Chris Scicluna, Head of Economic Research at Daiwa Capital Markets in London, echoed sentiments on the exit poll’s alignment with expectations, predicting Labour’s manifesto pledges to be fully executed under a landslide victory. Scicluna highlighted uncertainties over tax policies needed to support increased public spending commitments.
