Markets had largely priced in a majority for the Conservative Party, with speculative sterling shorts significantly reduced in recent months.
shorts significantly reduced in recent months.
Having fallen below $1.20 in early September after Johnson lost his working majority in Parliament, the pound had recovered around 10% of its value to trade above $1.32 as voters headed to the polls on Thursday, with a final YouGov poll suggesting a 28-seat majority for the ruling party. The recovery began when Johnson agreed a new Brexit deal with the EU on October 17. Positive sterling moves ahead of the election suggested that markets were hoping for certainty in the event of a Conservative majority, which would mean Johnson could likely take the U.K. out of the bloc on that withdrawal agreement ahead of the January 31 deadline.
The pound has yet to fully recover from the historic plunge suffered after the U.K.'s landmark vote to leave the EU on June 23, 2016. Before results began to emerge that night, cable had risen as high as $1.50 as traders banked on a vote to remain. By the time the result became clear, it was down at just above $1.32, around the same level reached on Thursday morning as voters headed to the polls three and a half years later.
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