Tories and Labour suffer local election losses, pound jumps
The Conservative and Labour parties both lost ground at local elections on Friday, with smaller parties and independent candidates hoovering up more seats as voters expressed their frustration over Brexit deadlock.
The Conservatives had lost 32 councils and more than 750 seats by mid-afternoon, while Labour lost eight councils and more than 90 seats with results still pouring out.
According to a BBC analysis on 650 wards, if Friday's results were replicated across the UK, then Conservatives and Labour would obtain 28% of the total vote each, versus 19% for the Lib Dems and other parties and independents the remaining 25%.
On a related note, in a research note sent to clients earlier, Jane Foley, Senior FX Strategist at Rabobank said: "PM May is still hoping to avoid what is likely to be a drubbing for her party in the May 23 European parliamentary elections. A near-term Brexit deal could still allow her to side step these elections even if she has to make concessions to the Labour party on a customs union.
"Although Labour is also likely to suffer a loss of support in the European elections, the party’s leadership may wish to see the Tories being thrashed since this could be useful to their desire to force a general election."
As of 1635, the pound was running sharply higher, adding 0.71% to 1.1746 euro.
"Dollar weakness and a Lib Dem surge in the local elections (a most unexpected phrase to write) have driven sterling higher. Both the main parties, ostensibly pledged to deliver Brexit, have been punished while the nation’s long-established Remain party has been boosted," chipped in IG's Chris Beauchamp.
"Low turnout and protest votes will distort the picture, but it also looks much less certain that a general election would be very good for Labour right now. Indeed, if their vote share stays just below 30% it would be very tough for them to assemble a stable coalition."
Speaking at the Welsh Conservative Conference, Prime Minister Theresa May ignored a heckler's call to resign as she stated that the results sent a clear message that the two largest parties had to "get on" with delivering Brexit.
May's government has been engaged in cross-party talks with Jeremy Corbyn's Labour in an effort to hash out a Brexit solution that might be able to garner the support in the House of Commons that the Prime Minister's earlier attempts failed to win, ultimately resulting in the Brexit deadline delay to 31 October.
However, the Liberal Democrats have been the primary beneficiaries of the poor showing from the UK's two largest parties, taking control of 11 councils and more than 450 seats, while the Green Party also profited as they gained more than 100 seats and independent councillors are up by more than 300.
Both parties oppose Brexit and endorse a second referendum, with Liberal Democrat leader Sir Vince Cable stating that "every vote for the Liberal Democrats is a vote for stopping Brexit".
Polling expert Professor Sir John Curtice said the results signal that the days of two-party dominance "may be over" and added that they may fare even worse in the 23 EU elections due to the maiden election outings of Change UK (The Independent Group) and Nigel Farage's new Brexit Party.
More than 50 of the 248 elections in England have yet to report, while Northern Irish results have not yet been released, meaning that there is still plenty more scope for suprise on a day of defeat for the UK's dominant political parties.