In Brief

Pound rockets as Conservative majority is confirmed

Analysts say general election outcome is good news for markets

Sterling has soared as the Conservative Party won an overall majority in the general election.

As traders dared to hope that the party’s strong majority would remove uncertainty over Brexit, the currency leapt 2.2% to $1.34, its highest level since May last year. The pound also jumped to a three-and-a-half-year high against the euro.

The BBC's economics editor, Faisal Islam, said the scale of the Tory victory had calmed the mood of the financial markets.

“The most disruptive form of no deal has been taken off the table,” he said.  “The market reaction is a reflection not just of the result, but of the fact that [a big majority] gives the prime minister room for manoeuvre.”

Capital Economics chief UK economist Paul Dales added that “passing a Brexit divorce deal in the coming weeks would remove any risk of a no deal Brexit on 31 January, reduce the immediate uncertainty and lift business investment at least a bit”.

He added that “in a Budget in February, the Conservatives would probably give the economy an extra kick by raising public investment by up to £20bn”.

Neil Wilson of Markets.com joined the cheer, telling The Guardian that: “For the markets and for business this is the perfect result – a clear majority for the Tories, the Corbyn risk nullified entirely, a major reduction in uncertainty around Brexit and even a quick Budget to inject the economy with some added impetus.” 

He added: “The only doubts are around the next phase of Brexit – the future relationship – but with a large majority the government will be in a better place to negotiate and do what it needs to do.”

–––––––––––––––––––––––––––––––For a round-up of the most important stories from around the world - and a concise, refreshing and balanced take on the week’s news agenda - try The Week magazine. Start your trial subscription today –––––––––––––––––––––––––––––––

Recommended

‘Even with vaccines, we’ll still have to learn to live with Covid’
A paramedic gives a Covid-19 vaccination.
Instant Opinion

‘Even with vaccines, we’ll still have to learn to live with Covid’

Nicola Sturgeon’s plan for ‘illegal’ independence referendum
Nicola Sturgeon attends Scottish Parliament in Holyrood
Behind the scenes

Nicola Sturgeon’s plan for ‘illegal’ independence referendum

‘Get kids vacc to school’
Today's newspaper front pages
Today’s newspapers

‘Get kids vacc to school’

‘Fixating on the R number isn’t real science’
Chief Medical Officer Professor Chris Whitty speaks during a news conference at 10 Downing Street.
Instant Opinion

‘Fixating on the R number isn’t real science’

Popular articles

What do Covid vaccines cost - and who is paying over the odds?
People wait to be vaccinated at Salisbury Cathedral
Getting to grips with . . .

What do Covid vaccines cost - and who is paying over the odds?

Best TV crime dramas to watch in 2021
Line of Duty series six returns to BBC One in 2021
In Depth

Best TV crime dramas to watch in 2021

Ten Things You Need to Know Today: 25 Jan 2021
10 Downing Street
Daily Briefing

Ten Things You Need to Know Today: 25 Jan 2021

Free 6 issue trial then continue to