The pound continued to rise against the US dollar (GBPUSD=X) Friday morning after prime minister Boris Johnson’s Conservative party won the 2019 general election.
It has won 363 seats, with only two constituencies to report later today. This is way above the 326 seats needed in parliament to form a government. The large majority means, it’ll be a lot easier for Johnson to push through a Brexit deal as he doesn’t need support from other parties to secure a majority vote.
After Johnson was re-elected in Uxbridge, west London, in which he increased his majority, he said: "It does look as though this One Nation Conservative government has been given a powerful new mandate to get Brexit done."
"Above all I want to thank the people of this country for turning out to vote in a December election that we didn't want to call but which I think has turned out to be a historic election that gives us now, in this new government, the chance to respect the democratic will of the British people to change this country for the better and to unleash the potential of the entire people of this country."
Later in the morning he reiterated that his mandate to take the UK out of the EU next month was with "no ifs, no buts."
The pound initially started it ascent, surging by 2.2% at 10pm local time Thursday night to $1.3498 (GBPUSD=X) shortly after an exit poll predicted that the Conservative Party would win 368 seats in parliament, well above the 326 needed to form a government.
It marks the highest level for the pairing since June 2018. Sterling also rose by 1.7% against the euro to €1.2063 (GBPEUR=X).
A win for Johnson’s party means Britain will likely officially leave the EU at the end of January and move on to the next stage of negotiations. The reason why investors prefer the Conservative government is because Jeremy Corbyn’s Labour party is seen as predominantly anti-business.
“Expect the pound to soar above predictions to $1.40, billions of pent up business investment to be unleashed to boost the economy, and the FTSE 100 to open stronger before paring back, as Boris Johnson’s Conservatives secure an impressive majority in the UK general election,” said Nigel Green, CEO and founder of financial services firm deVere Group.
“The UK’s FTSE 100 will open higher on Friday morning. However, this is likely to be a positive knee-jerk reaction, with some gains likely to be given up throughout the day as most FTSE companies earn in dollars and the pound is stronger.”
“It now looks more likely that Boris Johnson will indeed be able to ‘get Brexit done.’ His party’s large majority in the Commons helps him pass his Brexit deal and it gives him more political sway when negotiating the UK’s future relationship with the EU and reducing the risk of no-deal at the end of 2020.
“However, there’s still a long way to go. Mr Johnson’s self-imposed end of December 2020 deadline is a mammoth challenge, and a no-deal Brexit is still possible on 1 January 2021.”
Meanwhile Corbyn announced that he will stand down as leader of the opposition party Labour.
"I will not lead the party in any future general election campaign," said Corbyn said before adding that there needs to be "a process of reflection" about Labour’s direction.
Labour's shadow Brexit secretary Sir Keir Starmer said on Twitter: "There is no hiding from the overall result. It is devastating - it will hurt the millions of people who so desperately need a Labour government.
"They have suffered so much under ten years of Tory austerity and will suffer more because of this result. We must now reflect; but we must also rebuild."