By Cornelius Luca
New York, June 8 (BridgeNews) - Sterling sank to a fresh 15 1/2-year low of $1.3780 following the Labor Party's resounding victory in the U.K. general election. Conservative Party leader William Hague's resignation acted as a trigger for the move and there is speculation that the new government will speed up the U.K.'s entry into the euro zone. The pound would likely need to be devalued as part of the process of the U.K. joining the euro. The euro rose to a three-week high of 0.6168 sterling.
* * * Euro/dollar, dollar/yen and dollar/Swiss franc remained sidelined within recent ranges as traders focused on the U.K. developments. Only dollar/Canada extended its current week's losses to a new four-month low of 1.5187.
Results from Thursday's election showed Labor set to win a 167-seat majority in the 659-seat House of Commons, not far short of its 1997 victory.
Traders are confident that Prime Minister Tony Blair's decisive defeat of the opposition Conservative Party, which fought on an anti-euro platform, may mean the drive for U.K. entry to European Economic and Monetary Union will go ahead with less resistance.
"We need to make changes there (in European policy) too, so that we are engaged, exerting influence," said Blair.
Trading will remain focused Friday on sterling's moves vis-a-vis both the dollar and the euro. The light domestic event agenda, which only includes a speech by Philadelphia Fed Bank President Anthony Santomero at 1300 ET, won't help much.
Current Previous Change Global Global
NY open NY close low high
USD/JPY 120.53 120.13 0.40 120.07 120.76
EUR/USD 0.8470 0.8505 -0.0035 0.8457 0.8520
EUR/JPY 102.09 102.10 -0.01 101.62 102.70
GBP/USD 1.3822 1.3928 -0.0106 1.3780 1.3936
USD/CHF 1.7992 1.7915 0.0077 1.7882 1.7995
USD/CAD 1.5197 1.5215 -0.0018 1.5187 1.5226
AUD/USD 0.5224 0.5194 0.003 0.5187 0.5236
NZD/USD 0.4163 0.4156 0.0007 0.4157 0.4187
SP.1 1291.50 4.70 1288.70 1296.00
ND.1 2013.00 35.00 2004.00 2022.00