Sharp gains in pound ahead of open

The pound was registering sharp gains ahead of the start of trading as markets continued to digest the surprisingly strong showing for the Conservatives at the elections.

According to the latest BBC forecast the Tories may have obtained 325 of the seats in the House of Commons, which could be enough to provide them with a wafer-thin majority in parliament.

As of 06:12 cable was higher by 1.76% to reach 1.5515.

Overnight Berenberg economist Holger Schmieding labelled the result of the first exit poll “good news” for the UK’s economic outlook.

At the margin the SNP’s strong showing may also reduce the risk of Brexit slightly.

“It averts the risk of a tilt towards leftist policies under a Labour government relying on SNP support. The need for the Conservatives to find support for their policies from the LibDems and/or the DUP may help to blunt some of the harsher edges of envisaged Conservative expenditure cuts, helping to keep the UK economy close to its 2.5% rate of trend growth,” Schmieding said.

On the subject of Scotland, the economist thinks the SNP’s strength does not seem to indicate a growing appetite for independence but does put the ones on the new parliament to deliver a serious constitutional reform.

“In political terms, England and Scotland seem to be two countries apart,” he added.