Sunak ends uncertainty with July 4 poll date
Market focus likely to remain on inflation, rates
Sunak, Starmer to avoid upsetting recent market calm

LONDON, May 23 Reuters A surprise British general election in July has removed a layer of uncertainty for UK markets, leaving investors to focus on the outlook for interest rates and the economy as the dominant forces driving the pound, stocks and bonds.

Prime Minister Rishi Sunak called a general election for July 4 on Wednesday, after data showed British inflation dropped to 2.3 in April, hoping to turn around the Conservatives39; dismal polling numbers with a message that the economy has turned a corner.

Most investors are working on the assumption that Keir Starmer will become the next premier, with his opposition Labour party consistently around 20 ahead in the polls.

A shared aim of Sunak and Starmer will be to avoid upsetting a tentative calm in markets with any major fiscal announcements, analysts say.

Former Prime Minister Liz Truss in 2022 sent UK government bonds and the pound crashing with plans for huge tax cuts that would have caused the budget deficit to soar.

UK markets have had a volatile three years, thanks to high inflation and Truss39;s brief premiership, but have recently found a footing with the FTSE 100 stock index at record highs, sterling rising and big investors buying government debt.

Sunak39;s announcement on Wednesday pushed the pound slightly higher and stock futures a touch lower….