Friday 13th December 2019 - 08:10 (GMT)
Sterling moved off the bottom of the recent range following yet another memorable evening in UK politics and on currency markets.
The pound surged 3% just after 22:00 (GMT) as voting stations around the UK closed following turbulent weather and a 67.1% turnout. Initial exit polls gave the Conservatives 368 seats which was enough to convince markets that they would secure the majority required to pass some form of Brexit bill into law next month. This moved GBP to its highest levels since the 2016 referendum, touching €1.2080 versus the euro and $1.35 versus the dollar, as concerns over a hard Brexit significantly diminished.
This was confirmed overnight and the UK awoke to a Conservative-led government as voters made their voice heard during what has been dubbed “The Brexit Election”. The Conservative party finished the evening with 365 seats, well above the 325 required for an overall majority and the biggest since Margaret Thatcher’s victory in 1987.
Volatility is expected to remain high as markets digest the economic impact of the UK’s now likely departure from the European Union next month. There are still question marks over what sort of trade deals can be negotiated under Boris Johnsons current agreement and over what time frame they could be implemented. Attentions will also focus on Februarys budget announcement, with expectations of an increase in public investment of up to £20bn.
Elsewhere, Jeremy Corbyn announced he would step down as leader of the Labour Party following their worst election result since 1930, winning only 203 seats. The SNP secured 48 out of 59 seats in Scotland that will ensure calls for another referendum on Scottish independence will continue to grow louder in Westminster. And the Liberal Democrat leader Jo Swinson suffered the ultimate humiliation of losing her own seat in East Dunbartonshire.
