Sterling skyrocketed nearly two per cent as the exit poll predicted a huge Tory majority of 86 seats, the largest for the Conservatives since the days of Margaret Thatcher.
The pound briefly hit as high as $1.35, reaching a level last seen in May 2018, which put the currency on course for its biggest one day gain since January 2017.
Against the euro, sterling reached 82.8p, a two per cent rise on the day, a return to the levels of July 2016.
Read more: Election night live: The results
Analysts suggested the FTSE 100 was looking to open at 7350p, up 75 points, although they added that it is too early to call accurately.
The City welcomed the result, saying if the poll was accurate it could lift the uncertainty that has been hanging over the British economy since 2016.
Chris Beauchamp, chief market analyst at IG, agreed: “If the result does turn out to be anything like this, then Boris Johnson has what he craves, a clear majority to push forward with his Brexit plans and reshape the country after years of austerity.
“Uncertainty over Brexit and the UK’s direction has been the key reason why the UK has underperformed versus other markets over the past few years.
“A tough few months (and maybe even years) of negotiation lie ahead, but at least now the UK government knows it has the will of the people and Parliament behind it. UK assets may now finally play catch-up with the rest of the world, as investors return to the country.”
Simon Harvey, market analyst at Monex Europe, said: “The fact that the exit poll suggests a massive victory suggests that the sterling rally will continue through the night.
“As seats declare through the night it’s likely to be a drip feed rally, and will likely settle at £1.35 to £1.37.”
Neil Wilson, chief market analyst at markets.com, said: “All the fears about a hung parliament have proved unfounded.”
“This looks like a comfortable evening ahead – the margin of victory is huge and even if it not quite as big as the exit poll indicates, the Conservatives will still have a huge majority.
“There could be further upside from here yet. With the stops running we can see 1.36-7 coming into view – if it pans out as the exit poll suggests.”
Ricardo Evangelista, senior analyst at Activtrades, said the fact that the pound was pushing £1.35 “reflects greater confidence in what’s going to happen now.
“We’ll get Brexit on 31 January, and negotiations with the EU over a trade deal will be much more constructive.”
Paul Dales, chief UK economist at Capital Economics, sounded a note of caution: “Unless Johnson drops his pledge not to extend the transition period, that boost probably won’t be big enough to prompt interest rate hikes next year or take the pound above $1.35.”
However, he added that a majority would reduce immediate uncertainty and lift business investment by removing any risk of a no-deal Brexit.
He said that a raise in public investment of up to £20bn – roughly one per cent – in February’s budget was likely.
Those stocks which had been under threat of nationalisation, like Royal Mail, BT, and National Grid, are predicted to enjoy “handsome gains”, according to Wilson:
“These could easily jump 3-4% but we will look for more accurate calls later on.”
The prospect of sign-off for phase one of the US-China trade deal was also welcomed, with the combination expected to exert a considerable amount of positive sentiment on the market.
Labour are predicted to lose 70 seats with 191, whilst the SNP are expected to win 20 more seat to reach 55.