Sterling surged as the exit polls were released last night, will the unexpected forecast that the Conservative Party would gain an even larger share of seats. The opinion polls prior to the election had the Labour and Conservative Party tied, however the Tory’s support has come through at the ballot box.
The number of seats required to have an outright majority is 326, the initial exit polls estimated 316, with the latest view being around the number for a clear majority.
The equity and bond markets were closed as the initial reaction came through, with Sterling strengthening against the US Dollar and the Euro.
With cable rallying to the strongest rate since 13 February, it wasn’t surprising to see profit taking at session highs. GBPUSD has come off from session highs to currently trading 1.5428, with more traders at their desks and other markets opening up, further FX flows will be expected.
How the momentum holds from here will depend on the final seat count, however with the latest prediction being 329 seats which would be a slim majority.
The first winner from the election is the Conservatives Party, the second is Sterling; the market's hadn't priced in a Conservative gain of this number of seats.
Futures markets are pricing the FTSE 100 to open up over 100 points around 7,000.
The Conservative’s campaigned with the promise of a referendum on the UK’s membership of the Eurozone. After the dust settles on this election, it won’t be long before analysts highlight the potential risks of a British exit from the Eurozone.