Polls suggest the Conservative Party will lose power after 14 years, as the U.K. heads into a six-week election campaign.
U.K. Prime Minister Rishi Sunak surprised the public, the media and politicians with a national election date of July 4.Financial markets have largely factored in a change of government this year, and seem "sympathetic" to the idea of a Labour government, analysts said.
He stressed that recent economic data was a significant part of his decision-making, telling the BBC's "Today" program Thursday that inflation had gone "back down to normal," the economy was growing and wages were "rising sustainably." While Wednesday's inflation figures showed a sharp drop in the headline rate to near the Bank of England's 2% target, they were higher than many economists had expected.on an interest rate cut in the summer fell as a result, and it now looks unlikely the central bank will cut on June 20, its last meeting before the election.
"Whatever happens it definitely will be a historic election," Hannah Bunting, lecturer in quantitative British politics at the University of Exeter and co-director of its Elections Centre, told CNBC's "Squawk Box Europe" on Thursday. "I'm not 100% convinced on that just yet, because we've had local voting recently ... and while the Conservatives did very badly in those, the real winners there were smaller parties and independents rather than Labour. So if that translates to a general election as well, then that Labour landslide is looking much less certain."While the election news rattled the political establishment, it failed to have much impact on markets.
The British pound's reaction was also muted, moving slightly higher against the U.S. dollar and lower against the euro.
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