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| Version 4 | Version 5 |
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| Pound plunges amid fears over Brexit delays | Pound plunges amid fears over Brexit delays |
| (about 5 hours later) | |
| Sterling and FTSE 100 expected to tumble further on Friday if there is a hung parliament | |
| • General election 2017: live updates• UK election results 2017 – live tracker | |
| Jill Treanor | |
| Fri 9 Jun 2017 02.05 BST | |
| First published on Fri 9 Jun 2017 00.58 BST | |
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| The shock election result sent the pound plunging amid fears that Brexit negotiations could be delayed if voters returned a hung parliament to Westminster. | The shock election result sent the pound plunging amid fears that Brexit negotiations could be delayed if voters returned a hung parliament to Westminster. |
| The pound immediately dropped in reaction to the shock 10pm exit poll, falling as much as 2% to $1.27 in the currency markets, its lowest level in six weeks. It was projected the Conservatives would become the largest party but fall short of the 326 seats required for a majority. | The pound immediately dropped in reaction to the shock 10pm exit poll, falling as much as 2% to $1.27 in the currency markets, its lowest level in six weeks. It was projected the Conservatives would become the largest party but fall short of the 326 seats required for a majority. |
| Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, described the exit poll as a “thunderbolt”, reflecting shock across the City, where dealers had begun the evening expecting a clear majority for the Conservatives. | Samuel Tombs, the chief UK economist at Pantheon Macroeconomics, described the exit poll as a “thunderbolt”, reflecting shock across the City, where dealers had begun the evening expecting a clear majority for the Conservatives. |
| The pound remained under pressure but analysts at financial firm IG said the futures markets were predicting the FTSE 100 index would open just 13 points lower, cushioned in part by the fall in sterling, which benefits the international companies in the index. | The pound remained under pressure but analysts at financial firm IG said the futures markets were predicting the FTSE 100 index would open just 13 points lower, cushioned in part by the fall in sterling, which benefits the international companies in the index. |
| The stock market had fallen 0.38% to 7449 on Thursday, before the exit poll was published. While investors were surprised when May called the election on 18 April, with the FTSE 100 suffering its biggest fall since the vote for Brexit, the Tories were expected to win convincingly. | The stock market had fallen 0.38% to 7449 on Thursday, before the exit poll was published. While investors were surprised when May called the election on 18 April, with the FTSE 100 suffering its biggest fall since the vote for Brexit, the Tories were expected to win convincingly. |
| But the exit poll showed that would not be case. During the night the currency regained some of the lost ground as the first results came in and traders stationed at their desks across the City calculated that the exit poll was overstating the Conservatives’ losses. | But the exit poll showed that would not be case. During the night the currency regained some of the lost ground as the first results came in and traders stationed at their desks across the City calculated that the exit poll was overstating the Conservatives’ losses. |
| But as the night wore on, the exit poll proved to be more correct than originally thought. Jeremy Cook, the chief economist at World First, said sterling was moving as each seat was called and at 1.30am, it reached a new low for the session of $1.2696, as sentiment shifted back towards the exit poll presenting a true picture. Cook saidsterling could fall to $1.24. This figure would, however, not be as low as the levels it plunged to after the Brexit vote almost a year ago. | But as the night wore on, the exit poll proved to be more correct than originally thought. Jeremy Cook, the chief economist at World First, said sterling was moving as each seat was called and at 1.30am, it reached a new low for the session of $1.2696, as sentiment shifted back towards the exit poll presenting a true picture. Cook saidsterling could fall to $1.24. This figure would, however, not be as low as the levels it plunged to after the Brexit vote almost a year ago. |
| “Currencies like governments with mandates – and don’t like delays to Brexit,” Cook said. | “Currencies like governments with mandates – and don’t like delays to Brexit,” Cook said. |
| Lee Hardman, a currency analyst at MUFG, also warned the pound was vulnerable. “The market will be praying that this exit poll has got it wrong. Currency volatility is the best proxy for market fears; if the Conservative ship is sinking, then the market will be looking for a lifeboat,” he said. | Lee Hardman, a currency analyst at MUFG, also warned the pound was vulnerable. “The market will be praying that this exit poll has got it wrong. Currency volatility is the best proxy for market fears; if the Conservative ship is sinking, then the market will be looking for a lifeboat,” he said. |
| Late on Thursday night, Kallum Pickering, an economist at Berenberg, agreed: “If the exit polls are right, tomorrow will be interesting, to put it mildly.” | Late on Thursday night, Kallum Pickering, an economist at Berenberg, agreed: “If the exit polls are right, tomorrow will be interesting, to put it mildly.” |
| The City was focused on the fear that fresh political uncertainty could delay Brexit negotiations. Kit Juckes, an economist at Société Générale, said: “There will be other polls, and results will come out through the night, but this is going to leave Theresa May struggling to keep control of the Brexit process.” | The City was focused on the fear that fresh political uncertainty could delay Brexit negotiations. Kit Juckes, an economist at Société Générale, said: “There will be other polls, and results will come out through the night, but this is going to leave Theresa May struggling to keep control of the Brexit process.” |
| Dean Turner, an economist at UBS Wealth Management, said: “It is early days, and the result can change, but it looks as though Theresa May’s grip over the Conservative party has weakened, which does not bode well for the forthcoming Brexit negotiations.” | Dean Turner, an economist at UBS Wealth Management, said: “It is early days, and the result can change, but it looks as though Theresa May’s grip over the Conservative party has weakened, which does not bode well for the forthcoming Brexit negotiations.” |
| There was uncertainty about whether the election result could lead to a softer Brexit. Pickering said: “Markets might perceive the near-term uncertainty to be worse than it was after the Brexit vote. However, if a hung parliament forces a cross-party compromise, it could lead to a softer Brexit strategy, and may turn out to be positive in the long run after some serious initial confusion.” | There was uncertainty about whether the election result could lead to a softer Brexit. Pickering said: “Markets might perceive the near-term uncertainty to be worse than it was after the Brexit vote. However, if a hung parliament forces a cross-party compromise, it could lead to a softer Brexit strategy, and may turn out to be positive in the long run after some serious initial confusion.” |
| While London dealers waited for the stock market to open, Chris Beauchamp, the chief market analyst at IG, said: “The shock of the result is not really translated into the market.” The loss of seats by the Scottish National party reducing pressure for Scottish independence was one potential reason, as was the prospect of a softer Brexit. | While London dealers waited for the stock market to open, Chris Beauchamp, the chief market analyst at IG, said: “The shock of the result is not really translated into the market.” The loss of seats by the Scottish National party reducing pressure for Scottish independence was one potential reason, as was the prospect of a softer Brexit. |
| The Confederation of British Industry was quick to say any new government should start to refocus on the economy, which, according to official statistics, was the worst performer in the EU in the opening months of 2017 as the Brexit vote started to take its toll. | The Confederation of British Industry was quick to say any new government should start to refocus on the economy, which, according to official statistics, was the worst performer in the EU in the opening months of 2017 as the Brexit vote started to take its toll. |
| “As a nation, we have the creativity, skills and global outlook to make the UK a true world leader in the industries of the future, bringing jobs and growth to all parts of the UK,” said Carolyn Fairbairn, the director general of the employers’ body. | “As a nation, we have the creativity, skills and global outlook to make the UK a true world leader in the industries of the future, bringing jobs and growth to all parts of the UK,” said Carolyn Fairbairn, the director general of the employers’ body. |
| “As early priorities, business will want to see a commitment to tax and regulatory stability, fast progress on a modern industrial strategy to support skills, infrastructure and innovation, and a Brexit approach that puts people and trade ahead of politics.” | “As early priorities, business will want to see a commitment to tax and regulatory stability, fast progress on a modern industrial strategy to support skills, infrastructure and innovation, and a Brexit approach that puts people and trade ahead of politics.” |
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