Value of sterling slides as United Kingdom election produces hung parliament

All eyes are on the British Pound, and there has already been a shock in the early hours of trading on Friday that led to the Pound taking a dive all the way from 1.2950 to below 1.27 following increasing concerns that the United Kingdom is heading for a hung parliament.

The rot for sterling had started when an exit poll showed the ruling Conservatives could fail to win a clear majority when markets had expected a handy victory.

The FTSE 100 gained 1.1 percent by 0720 GMT after Britons dealt the governing Conservative party a punishing blow, denying May the increased mandate she had gambled on, with no clear victor emerging from Thursday's parliamentary election. For the latest updates, click.

The exit poll predicted the ruling Conservatives would win 314 seats in the 650-member parliament and the opposition Labour Party 266, leaving no clear victor when markets had assumed May would easily increase her majority.

Betting agencies were already taking wagers on whether May would lose her job.

By 0150 GMT, sterling had shed 1.2 percent to $1.2785, having earlier carved out a two-month trough of $1.2693.

Its national chairman, Mike Cherry, said: "Negotiations should be led by a government and a Prime Minister that will be in place for the duration, and so we call for a delay to the scheduled start of negotiations".

"This was as much due to the fundamental backdrop: a recovery from the financial crisis and ultra-loose monetary policy from central banks the world over, in the form of falling (or record-low) interest rates and QE".

"Today's result will in part be seen as a vote against a definitive break from the European Union, and the market may soon begin to reassess the probability of a so-called "hard Brexit".

That still left sterling down 1.7 percent against the dollar on the day and on track for its biggest one-day fall since last June, though that move was dwarfed by an nearly 8 percent dive the day after last June's European Union referendum.

The Japanese yen gave up early gains to ease to 110.22 per dollar. The euro was little moved against the USA dollar at $1.1209 EUR=. "I think for the global market it doesn't matter".

Comey accused Trump of firing him to try to undermine the investigation into possible collusion by his campaign team with Russia's alleged efforts to influence the 2016 election.

"So it's not particularly impactful for thinking about".

Defensive sectors - those less dependent on the economic cycle - such as food and beverages and health care rose 0.8 percent and 0.5 percent respectively, while British utilities such as Centrica were among top gainers.

In commodity markets, spot gold was a whisker lower at $1,274.30 an ounce.

Brent crude oil rose 47 cents to $48.33 a barrel, US crude gained 40 cents to $46.04.

  • Zachary Reyes