Sterling could rally after British general election

Potentially closer ties with the EU under a Labour cabinet could help the the pound, which has kept the currency in check over the past eight years, strategists say

Sterling has been hit and never fully recovered since Britain voted to leave the EU.

The earlier-than-expected UK election is prompting traders to prepare for the country’s biggest political shakeup since Brexit, despite the mostly muted market reaction since the announcement was made.

Market strategists are gaming out election scenarios, with history showing UK equities trading relatively flat, or lower, during the first six months after wins for the ruling Conservatives. By contrast, stocks have historically strengthened about 6% following victories by the poll-leading Labour Party, according to Citigroup strategists led by Beata Manthey.