The political dilemma of the pound may be determined by the general election, which could lead to future gains and losses;

① With the opposition Labour Party expected to win a landslide election, the pound rebounded at one point this week, but the future of the pound depends on whether the next government can convince investors that its plan to repair the stagnant economy is reliable.

② The trade weighted exchange rate of the pound has returned to its level since the 2016 Brexit referendum, as currency traders bet that the era of long-term exchange rate fluctuations caused by the turbulent politics of the ruling Conservative Party is coming to an end.

③ More than 20 economists and former government officials have stated that if the Labour Party wins on July 4th, the center left government will need to maintain investor trust while addressing unresolved economic challenges for the Conservative Party.

④ The ratio of public debt to Gross Domestic Product (GDP) in the UK has reached a 63 year high, and as of the end of 2023, foreign direct investment has declined in four out of the past five quarters. The think tank at the Institute of Finance stated that in order to avoid spending cuts, the Labour Party will need to raise taxes or expand borrowing.

⑤ When investors evaluate the next government's response to these issues, the risk balance of the pound is not balanced, as the pound already reflects the factors that Labour's majority in parliament will drive UK economic growth.

⑥ Costas Milas, a finance professor at the University of Liverpool, stated that "a lack of confidence in the political situation will further devalue the pound and make it more unstable." Milas specializes in economic policy uncertainty and financial market relations.

⑦ Under the leadership of party leader Keir Starmer, the Labour Party leads the ruling Conservative Party by about 20 percentage points in polls.

⑧ The pound was once the world's reserve currency, and its current exchange rate against the US dollar is lower than the average level of 40 years before 2016, but its performance of around $1.27 has surpassed all major currencies this year.

⑨ The pound rebounded sharply from the record low of 1.03 set in 2022. In that year, Liz Truss, the former Conservative Prime Minister, introduced a small budget with insufficient funds, which led to the collapse of the bond market, the rise of debt costs and the intensification of inflation. The roller coaster oscillation of the pound prompted commentators to jokingly refer to it as the "great British peso", compared to high-risk emerging markets