Sterling drops after early poll shocks City

THE pound dropped last night after the exit poll suggested the Tories had fallen short of an overall majority.

Within minutes, sterling fell 1.5 per cent, or two US cents, to $1.27 as dealers fretted over the danger of an unpredictable coalition.

Against the euro, the pound fell more than 1 per cent, or two cents, to 1.13 euros.

Trading floors across the City were braced for a rollercoaster evening, with staff called in to work through the night. Neil Wilson, of ETX Capital, said: ‘The pound has dropped but it’s not collapsing. A hung Parliament would potentially mean a softer Brexit, so markets are not panicking.’

Memories of the Brexit vote are still raw on trading floors after they were wrong-footed cent against the dollar to as low as $1.20 in the event of a hung Parliament, a poll of analysts by Bloomberg suggested.

But it was also thought a large majority for the Conservatives could push the pound up 3 per cent from its current $1.29 to $1.33.

Adam Cole, of investment bank RBC Capital Markets, said: ‘There is a very simple rule of thumb – the larger the Conservative majority, the more positive it is for sterling.’