Election 2017: Pound under pressure amid Labour surge – BBC News

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The pound has fallen sharply as traders react to the results of the general election.

The currency markets had been expecting a clear victory for Theresa May’s Conservatives, but the party may not win a majority in the Commons.

Sterling fell as low as $1.27, down about two and a half cents from its level late on Thursday.

It has since recovered to be down 1.5% at $1.2760, but the market is volatile and traders are cautious.

“Given the patchy history of exit polls, this time we will have to wait for the seat by seat results, setting the pound up for a volatile day,” said Sean Callow, senior currency analyst at Westpac.

Sterling fell after an exit poll for the BBC, ITV and Sky released as the polls closed at 22:00 cast doubt on an overall Conservative majority, raising concerns about increased uncertainty and a possible delay to Brexit negotiations.

The BBC projects that the Conservatives will be the largest party with 318 seats, but they require 326 for a majority.

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Neil Wilson, senior market analyst at ETX Capital said the exit poll was a shock for the financial markets.

“It’s fair to say markets had been a little complacent about this result,” he said.

If the election results in a hung parliament the pound could fall as low as $1.25 on Friday, Mr Wilson said.

“Trading is pretty thin overnight and the volumes will increase markedly later this morning when traders in London arrive at their desks, which might produce some more decisive price action,” he added.

Sterling has been trading in a range between $1.28 and $1.30 in recent weeks.

Against the euro the pound is down 1% at 1.142 euros.

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Read more: http://www.bbc.co.uk/news/business-40208460

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