Despite his party being around 20 percentage points behind in the opinion polls, Conservative leader and UK PM Rishi Sunak has called the next general election for 4 July. For some while he has maintained that it would be held in the second half of the year but quite so soon will come as a surprise to many. The move may reflect hopes that the surprisingly strong economy last quarter and recent sharp decline in inflation will provide the government with the best chance of victory it will get before the election deadline next January.

Financial markets will be expecting a substantial win by the main opposition Labour Party but an outright victory is not guaranteed - it would need a record swing for just a small majority - and political uncertainty will not be good news for the pound in the interim. However, with Labour now seen as much more business friendly than in the past and, crucially, committed to retaining the independence of both the Bank of England and the Office for Budget Responsibility, volatility in the run-up to the vote should be relatively limited. The pound was initially little changed following the PM's announcement.

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