Pound soars against dollar and euro
The pound has soared against the dollar and the euro as an exit poll predicted a Conservative majority.
Sterling hit an 18-month high against the dollar and was in touching distance of pre-brexit referendum levels against the euro.
A pound was up 2.21 per cent to 1.347 dollars and up 1.38 per cent to 1.205 euros.
Reaction from the City was one of relief, with traders previously expecting to stay up all night comfortable that the exit poll will play out.
Neil Wilson, chief market analyst at Markets.com, said: “Markets hate uncertainty but they would have hated a Corbyn government a lot more. This looks like a comfortable evening ahead – the margin of victory is huge and even if it is not quite as big as the exit poll indicates, the Conservatives will still have a huge majority.”
An 86 majority is predicted for the Tories, with many in the City fearful of Labour’s plans for nationalisation.
Dean Turner, an economist at UBS Wealth Management, said: “We’ve long said that sterling looks a very cheap currency. If Brexit is indeed completed by the end of January, we see the pound trading as high as 1.35 against the US dollar.
“However, a long-term lack of clarity on Brexit and sterling to produce minimal UK earnings growth next year.”
Andy Scott, associate director at JCRA, said: “Sterling soared higher by over 2 per cent as nervous traders who had been selling sterling during the day, just in case it was another hung parliament, began buying it with gusto. I suspect there was as much relief, as there was excitement at the size of the majority that was so unexpected.”
The London Stock Exchange was expected to also surge this morning, with shares in energy, telecoms and banks expected to rise although the strengthening pound could knock shares in internationally-focused companies.