Despite Pound Sterling’s (GBP) limited reaction to the UK election result, the drop in the value of the US Dollar (USD) over the past couple of sessions has allowed the GBP to move into the position as best performing G10 currency in the year to date, senior FX strategist at Rabobank Jane Foley notes.

GBP/USD to move higher in the months ahead

“GBP has shown little reaction to the July 4 UK general election results, continuing its nonplussed stance of recent weeks. UK politics can avoid the dramas and uncertainties associated with the Brexit, Johnson and Truss periods, we expect that GBP can continue its slow grinding recovery.”

“As expected, Labour won a strong parliamentary majority. However, it only increased its share of the national vote by a small percentage. Both markets and the electorate will be watching closely to see if Labour can consolidate its power. That depends on whether it can deliver on growth and improved living standards.”

“We expect EUR/GBP to edge lower into year end and we view rallies to 0.85 as selling opportunities. Cable will likely be subjected to further bouts of USD volatility in the coming months on uncertainties connected with both US politics and Fed policy, though we expect GBP/USD to move in a moderately higher range in the months ahead.”