June 2 (Reuters) - In an age of fragmented five-party politics in Britain, it may be worth considering the previously unthinkable: namely, could the next UK general election tee up a possible Conservative-Labour coalition government? And would sterling traders like it if it happened?

The answer to the currency question would probably be yes, if centrists from both parties held sway in a mould-breaking "grand coalition". One such centrist, Shabana Mahmood, has reportedly been lined up to be Britain's finance minister if Andy Burnham becomes Prime Minister. Wes Streeting is another high-profile Labour centrist, who might conceivably work amenably alongside centrist Tories in a coalition government.

Although a Labour-Tory coalition may at present sound fanciful, it might be better for GBP than some of the possible alternatives if the next general election returns a hung parliament (no single party with overall control). Those alternatives include a Labour-led coalition government including one or more of the Liberal Democrats, Greens and Plaid Cymru, and a coalition between Nigel Farage's Reform and the Tories.

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(Robert Howard is a Reuters market analyst. The views expressed are his own)