The Pound dropped overnight as exit polls revealed the prospect of Theresa May’s ruling Conservatives falling short of a majority and a hung parliament looking increasingly likely.
Sterling fell over a percent on expectation of a hung parliament becoming a reality; with what now seems likely to be a period of further uncertainty for the UK as we look to continue Brexit negotiations. This represents a shockingly bad election result for May who has plunged Britain into political chaos days before the start of Brexit talks.
Prime Minister Theresa May was fighting to hold on to her job on Friday as British voters dealt her a punishing blow, denying her the stronger mandate she had sought to conduct Brexit talks and instead weakening her party's grip on power. With no clear winner emerging from Thursday's parliamentary election, a wounded May signalled she would fight on, despite losing her majority in the House of Commons. Her Labour rival Jeremy Corbyn said she should step down.
With 643 out of 650 seats declared, the Conservatives had won 313 seats and were therefore no longer able to reach the 326-mark they would need to command a parliamentary majority. Labour had won 260 seats.
The surprise of a result that raises questions about how Britain will advance with its plan to leave the European Union, and whether any party can form a stable government, initially sank the pound by 2 percent against both the dollar and euro. This means Theresa May faces the humiliation of ending with fewer seats than when she called the election.
The initial exit poll predicted the Conservatives, traditionally favoured by markets as pro-business and fiscally prudent, would win 314 seats in the 650-member parliament and the opposition Labour Party 266, meaning no clear winner and a "hung parliament". Later projections gave the Conservatives a handful more seats but a raft of analysts predicted that would not head off more falls for the pound.
The Conservatives have said that in the event of a hung Parliament, Mrs May would get the opportunity to form a government first.
09.30 – GBP – Manufacturing Production MoM; Forecast at 0.8% against a previous of -0.6%