Sterling has appreciated since the beginning of the week as market sentiment remains positive, with expectations of a significant victory for Labour Party leader Keir Starmer, potentially ending 14 years of Conservative rule.
However, a tail risk remains if the Conservatives perform better than expected, potentially leading to a hung parliament. This scenario could introduce uncertainty and weaken the Sterling in the near term.
The outcome of the elections could affect treasury yields, increasing volatility in yields and the pound as election results are announced.
Traders are anticipated to shift focus to new economic data following the elections and the Bank of England meeting in the upcoming weeks.
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