Demand for Sterling surged last night when the first unofficial exit poll showed that the Conservatives were likely to have won 316 seats out of a possible 650. The poll put Labour on 239, the Scottish National Party on 58, the Liberal Democrats on 10 and the United Kingdom Independence Party on two.

The possibility of either the Tories or Labour receiving such a high number of seats looked unlikely before polling day, with pre-election polls pointing towards one of the closest votes for decades. Since then forecasts have been adjusted to give the Conservatives 329 seats, enough for a majority. The upshot of this is that Britain won’t be plunged into a long period of economic uncertainty as leaders squabble; and the Conservatives continuing with current policy was viewed as positive for the Pound.

Despite the now increased threat of an in/out EU referendum, markets were cheered by the more-decisive-than-anticipated nature of the vote.

Euro

Sterling jumped almost two cents against the Euro last night in reaction to the first unofficial exit poll.

The price to insure against large swings in the value of the Pound surpassed that preceding the Scottish independence referendum yesterday to reach the highest level for over five years. This weakened the UK currency. However, the Pound skyrocketed higher during the evening in response to an initial exit poll which paved the way for another Tory coalition government. It seems that the impact on the currency market could have been similar if it had been Labour who came out on top: markets were just happy to (hopefully) avoid a long, drawn-out period of negotiations.

Confidence that Greece could, one day this millennia, agree a deal with its creditors improved yesterday following upbeat remarks from Greek finance minister Yanis Varoufakis and German finance minister Wolfgang Schaueble.

Interestingly, media magnet Varoufakis was also in the headlines relating to a rumour that his wife was the infamous girl who ‘came from Greece…had a thirst for knowledge [and] studied sculpture at St Martins College’ from the Britpop band Pulp’s classic hit ‘Common People’. The details don’t quite match but it’s a nice thought nonetheless.

US Dollar

Propelled by what some considered to be a positive outcome from yesterday’s general election, Sterling reached a weekly high against the US Dollar yesterday evening. ‘Cable’ rallied by around 200 pips when newswires reported that the Conservatives were likely to have gained the most seats of any political party.

GBP/USD could continue to strengthen later today if US non-farm payrolls disappoint. But if the key labour market figures comes in at 236,000, as predicted, then we could see Sterling slide back down as Federal Reserve rate hike bets re-enter the equation.