Value of the pound plummets following hung parliament election result
THE pound has fallen around 2 per cent against other currencies after the UK election resulted in a hung parliament.
Over the past 24 hours, the pound has fallen to a seven-month low against the euro from 1.153 to 1.134, and also against the US dollar from 1.293 to 1.271.
The pound is now at its lowest rate against the euro in nearly 21 weeks, since January 15.
In real terms, it means Brits will get €19 less or $23 less for every £1,000 exchanged – worth £17 and £18, respectively, according to figures from currency expert FairFX.
But the fall in the pound isn't as dramatic as in the aftermath of the Brexit vote last June, when it plunged more than 10 per cent.
While the pound has fallen, the FTSE 100 soared above 7,500 points when the London stock market opened this morning.
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Because many of the FTSE 100 companies earn their money abroad, a weaker pound means profits earned abroad are worth more when converted back into sterling.
That means the FTSE 100 was given a big boost this morning.
The general election has ended in a hung parliament after the Tories failed to win a majority.
The Conservatives were hoping to far exceed the 326 seats needed to form a government on their own.
But they have so far only managed to gain 318 seats with only one seat left to declare.
Ian Strafford-Taylor, CEO of FairFX, said: “As the exit polls indicated a hung parliament and the results bore witness to this today, the pound has been hit as change spells uncertainty.
"Unfortunately, uncertainty is likely to characterise the coming days, weeks and months as a government is formed and Brexit negotiations start in earnest which could lead to further currency volatility."
What is a hung parliament?
WHAT happens if no party wins a General Election majority? Here’s the lowdown…
A hung parliament is declared if no party wins an outright majority by securing more seats than all the other parties combined.
In the UK a party must win 326 seats to secure an absolute majority.
Since 1929 there have only been two UK General Elections that resulted in hung parliaments – in 1974 and 2010.
When was the last hung parliament in the UK?
In 2010 David Cameron’s Conservatives formed a coalition with the Liberal Democrats, which lasted for the five year fixed-term parliament.
That year the Conservative’s won 306 seats, requiring the Lib Dem’s 57 seats for an absolute majority.
In 2015 the Conservatives won 331 seats.
What happens if no party wins a General Election majority?
The party with the most seats can choose to either form a coalition or rule as a minority government.
If the winning party decides to rule as a minority government it will be reliant on the support of smaller parties to pass legislature.
Or it can form a coalition with another party or parties so the combined number of seats amount to an absolute majority.
If both options fail parliament could be dissolved and a fresh election called.
As attention turns to who could take over if Theresa May steps down, bookies have slashed the odds of Boris Johnson becoming the next Prime Minister.
The Foreign Secretary and former Mayor of London was sitting at 66/1 odds of becoming the next leader of the UK as of 5.30pm on the election night – but in just hours was in at a five to one chance.
Some of the key details from the election so far:
- Hung parliament confirmed with Tories missing out on majority of 326 with polls predicting 318 seats - down from 330
- Labour forecast to take 262 - up from 232 in 2015. They are
- Theresa May faces mounting pressure – with the odds slashed on Boris Johnson to be the next PM
- Fears grow Brexit negotiations could be sunk if Mrs May does not secure a majority
- Lib Dem Nick Clegg loses Sheffield Hallam seat but Vince Cable regains Twickenham while leader Tim Farron clings on
- Home Secretary Amber Rudd holds on to Hastings seat by barely 300 votes
- Huge losses for SNP as former chief Alex Salmond and deputy leader Angus Robertson are both beaten by the Tories.
- Labour on march in London beating Tories to Battersea constituency
- Pound slides two per cent as exit poll predicts hung parliament
- Ukip voters desert party with vote share down by ten per cent
- Growing fears that Mrs May will have to call a second election later this year
Follow our General Election 2017 results LIVE blog for the latest updates