Sterling strengthened against a generally weaker Dollar, on Thursday, impacted by disappointing US economic data, as Britons vote in a parliamentary election.

Opinion polls indicate that Sir Keir Starmer's Labour Party is poised for a significant victory over Prime Minister Rishi Sunak's Conservatives, Reuters news agency reports.

At the time of writing the Pound rose 0.1% against the Dollar at $1.2755, after gaining 0.46% on Wednesday as soft US economic data drove the greenback down.

So far this year, the Pound has generally been slightly lower against the Dollar but has outperformed other major currencies. However, due to Wednesday's weakness in the US currency, Sterling has recently gained 0.23% against the Dollar for the year.

“It was also the second best performing G10 currency last year, but you have to bear in mind that in September 2022 it was at its weakest ever, so if you look at Sterling now it is not a strong currency but it has recovered from a very low base,” stated Jane Foley, head of FX strategy at Rabobank.

The Pound's rebound has been supported by Britain's stronger-than-forecast economic performance and the Bank of England's conservative approach to reducing interest rates compared to its European counterparts.

There is also optimism that a decisive election victory for Labour will bring increased stability both politically and economically, the Reuters report adds.

“If investors carry on believing that significant tax increases are not likely, that the Labour Party wants to stimulate growth by convincing investors to come back to the UK, we could see a moderate rally for the Pound,” said Foley.

Should Labour win by a very large majority, however, “there may be a little bit of concern pushing into markets” that this could result in “more left-wing policies to the fore with little opposition,” she went on to add.

Against the Euro, Sterling held steady at 94.68 pence.