LONDON (Reuters) - British Prime Minister Rishi Sunak called a national election on Wednesday, naming July 4 as the date for a vote his governing Conservatives are widely expected to lose to the opposition Labour Party after 14 years in power.

An election has been widely anticipated this year. October or November had been seen as the most likely timing by most pundits.

Keir Starmer's Labour Party has held an around 20 point lead in opinion polls since late 2021, before Sunak took office in October 2022 and following the scandal-ridden premiership of Boris Johnson and the upheaval of Liz Truss's 49-day tenure.

MARKET REACTION:

FOREX: Sterling held onto its gains and was last up 0.25% on the day at $1.274, marginally above levels seen before Sunak started speaking outside his Downing Street residence.

STOCKS: Futures on the FTSE 100 stock index were down 0.7%. They had traded down 0.6% earlier in the day.

BONDS: Britain's bond market was closed when the election announcement was made. The 10-year government bond yield had risen earlier in the day on latest inflation numbers

COMMENTS:

NICHOLAS REES, FX ANALYST, MONEX EUROPE, LONDON:

"Right now, the big thing for sterling is, you're going to see a large stable majority."

"Markets really are just looking for stability and certainty, from any government coming in and right now it looks like we are going to get a relatively moderate Labour government that is going to pursue relatively market friendly borrowing policies and markets are looking at it and going 'thank goodness'."

"The current polling is around the sweet spot for sterling. If Labour were to give up another 5 to 10 points to the Conservatives, markets would get a little bit jittery about the size of their majority. If they gain another 5 to 10 percentage points then that becomes a Conservative extinction event, and then any opposition will come from the left wing of the Labour party and that will be a worry for markets."

NEIL JONES, SENIOR FX SALES TO SENIOR FINANCIAL INSTITUTIONS, TJM Europe, LONDON:

"Currencies like political certainty and the pound is no exception. An election generates unknown variables and moving parts."

"There is very heavy focus on the BoE and the dollar right now and that will remain key, we've just added another layer of significance into the mix for the pound."

(Reporting by the Reuters Markets Team)