The pound has held firm this morning in the wake of Labour’s landslide victory in the General Election.
With fewer than 10 seats to be called at 8am today (July 5), the party won 410 seats, an increase of 209.
The pound was slightly up against the US dollar at $1.27, up 0.1 per cent.
The UK’s FTSE 100 also rose 0.3 per cent, to 8,274 this morning.
Sarah Ruggins, head of investment specialists at St. James’s Place, said investors had already been reporting increased confidence ahead of the election, likely to be consolidated by the result.
She said: "Greater policy certainty going forward should lead to greater confidence in the growth outlook for the UK economy.
“The new Labour government may be a boon for broader trade relations and since planned policy changes are likely to take time to implement, it’s unlikely we’ll see any immediate negative effects from this election result.
“While today’s Labour victory may result in a probable short-term uplift for UK shares, it could also have a positive impact on the UK market over the long term, making it more attractive for investments compared to more expensive, developed, potentially overvalued equity markets, such as the US."
Adrian Gosden and Chris Morrison, investment managers at Jupiter, hoped the new government would provide a good political backdrop for the economy and market sentiment.
In a joint statement they said: "UK equities have enjoyed solid performance this year to date, and we are looking for a sustained rebound in the market, helped by supportive factors such as weakening inflation, a potential Bank of England rate cut, attractive valuations for UK equities and good earnings performance from UK companies.”
Chris Forgan, portfolio manager at Fidelity International, echoes this view.
“As the dust settles on the election, we believe the UK can look forward to a period of greater political stability that could attract foreign capital back to the country," he said.
"The economy is recovering from a slowdown in 2023 and the outlook is improving.
"If we look at price-to-earnings, price-to-book, or dividend yield, the UK offers excellent value.
"This is partly to do with the sector makeup of the UK market being more skewed towards value sectors such as energy and materials and away from more growth orientated sectors like technology.
"However, there is no doubt that the UK offers equity exposure at an attractive price, with opportunities across the market cap spectrum.”
tara.o'connor@ft.com
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