General Election 2017: Pound slumps on exit poll showing Conservatives aren't on track for a majority as results start to roll in

Rebecca Smith
The pound is falling fast
The pound is falling fast (Source: Getty)

The pound has hit a new low for the night, dipping to $1.2695 as uncertainty remains over how the General Election will play out.

It initially fell around 1.5 per cent on the back of the exit poll signalling the Conservatives aren't on track for an overall majority in the General Election.

Sterling then gained back some ground, trading at around $1.281 as traders banked on the belief the exit poll had got it wrong.

Uncertainty is back though, as the Conservatives have failed to win a key target seat of Darlington, which Labour held onto.

The pound started at $1.295 and dropped to $1.273, after the first exit poll came in and had the Tories picking up 314 seats, not enough for a majority and losing 17.

If neither the Conservatives nor Labour could piece together a working government, we could then face another General Election with Brexit negotiations on the horizon too.

Read more: Time is up: Polling for the 2017 General Election has closed

The poll suggests Labour will get 266 seats, a rise of 34 seats.

It has the Liberal Democrats at 14 seats, an increase of six, a slight improvement after the battering they took in 2015.

Read more: Which constituencies will announce results first? Here are the 10 speediest

Sterling has been trading in a range between $1.28 and $1.30 in recent weeks, and analysts have said markets will be hoping the exit poll has got this wrong.

Chris Beauchamp, chief market analyst at IG, said:

The exit poll has certainly produced a shock wave in markets, with disbelief and then a swift drop in the pound in FX markets.

The FTSE 100 played catch-up as well, falling below the low of today’s session as traders digested the potential for a hung parliament.

"Once again, it seems as if the British public has decided to surprise everyone. Now we have to wait for the results to start coming in, but markets will not like the idea of the Conservatives losing their overall majority," he added. "What is also interesting is the low total for the SNP, which will make life difficult for Labour in forming a coalition with them and the Lib Dems. This election has been getting more interesting over the past six weeks, and the uncertainty has just been ramped up more than a few notches."

Meanwhile, Kathleen Brooks at City Index, said: "At this stage, the uncertainty is likely to keep pressure on the pound tonight, which has fallen to the base of its recent range. In GBP/USD $1.2530 – the low before the election was called – is a key support level. Right now, the market is not in panic mode, but it is shell shocked by this result."

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