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| Election 2017: Pound falls sharply but UK shares rise | Election 2017: Pound falls sharply but UK shares rise |
| (35 minutes later) | |
| The pound has fallen sharply after the UK election resulted in a hung parliament. | The pound has fallen sharply after the UK election resulted in a hung parliament. |
| Sterling's value had dropped overnight, and as trading got underway in London it slipped further, standing 2% lower at about $1.27, with markets worried about continued political uncertainty. | |
| Against the euro, the pound was down 1.7% at 1.1350. | Against the euro, the pound was down 1.7% at 1.1350. |
| However, shares were higher with the benchmark FTSE 100 index up 0.9% at 7,515.31. | |
| A fall in the value of the pound tends to boost the FTSE 100 as the majority of companies in the index have significant operations overseas. A weaker pound means profits earned abroad are worth more when converted back into sterling. | A fall in the value of the pound tends to boost the FTSE 100 as the majority of companies in the index have significant operations overseas. A weaker pound means profits earned abroad are worth more when converted back into sterling. |
| International giants such as GlaxoSmithKline and Diageo were among the strongest risers, up more than 2%. | |
| But shares in companies that make their money in the UK were shaken by the result. | |
| Housebuilders saw falls of up to 5%, while retail companies' shares also fell as a weaker pound makes imported goods more expensive. | |
| Hung Parliament: What happens next? | Hung Parliament: What happens next? |
| Election results live updates | Election results live updates |
| Election 2017: At a glance | Election 2017: At a glance |
| Election catches investors off guard | Election catches investors off guard |
| Traders had been expecting a clear victory for Theresa May's Conservative Party, but are now concerned about political uncertainty. | Traders had been expecting a clear victory for Theresa May's Conservative Party, but are now concerned about political uncertainty. |
| The Conservatives are still the largest party but will be short of the numbers needed to be fully in charge. | The Conservatives are still the largest party but will be short of the numbers needed to be fully in charge. |
| While the pound's move is significant, it is far less striking than that seen in the aftermath of the Brexit vote last June, when it plunged more than 10%. | While the pound's move is significant, it is far less striking than that seen in the aftermath of the Brexit vote last June, when it plunged more than 10%. |
| Some analysts say that might reflect the diminishing prospect of a "hard" Brexit. | Some analysts say that might reflect the diminishing prospect of a "hard" Brexit. |
| Mark Dampier, head of investment research, at stockbrokers Hargreaves Lansdown said: "This is very different to the Brexit vote of last year. | Mark Dampier, head of investment research, at stockbrokers Hargreaves Lansdown said: "This is very different to the Brexit vote of last year. |
| "While the result is a surprise and may lead to another election later this year - market reaction has generally been subdued so far because the Tory government will remain in power but a hard Brexit now looks less likely... a softer Brexit could see sterling recover." | "While the result is a surprise and may lead to another election later this year - market reaction has generally been subdued so far because the Tory government will remain in power but a hard Brexit now looks less likely... a softer Brexit could see sterling recover." |
| Former Business Secretary Sir Vince Cable said "the whole Brexit approach will have to be rethought". | Former Business Secretary Sir Vince Cable said "the whole Brexit approach will have to be rethought". |
| Sir Vince is returning to the Commons after regaining the seat of Twickenham in southwest London for the Liberal Democrats. | Sir Vince is returning to the Commons after regaining the seat of Twickenham in southwest London for the Liberal Democrats. |
| Jordan Rochester, economic analyst at Nomura, said the weaker pound could hold back consumer spending: "Greater uncertainty could herald weaker investment, while the impact from a lower sterling could mean weaker consumption; this is not an environment in which the Bank of England would feel comfortable raising interest rates any time soon." | |
| Domestically, some commentators are suggesting that the Conservative government's long-running austerity programme, which has seen public spending constrained in a bid to cut UK debt, may be over. | |
| But Jim Leaviss, from M&G Investments, said: "There may be less austerity and fiscal tightening in future under a weakened Conservative Party, but there will be no significant rise in gilt issuance [government IOUs] and the goal of reducing the UK's debt/GDP over the next few years is likely to remain in place." |