The pound has fallen sharply after exit polls for Britain’s election forecast that the Conservatives would not get a majority of the seats in the House of Commons.
The pound lost more than 2 cents against the dollar within seconds of the exit poll result, falling from $1.2955 to $1.2752 late Thursday.
Some investors worry that the lack of a majority for the Conservatives, which are widely expected to top the poll, would weaken the next government’s hand in the upcoming negotiations to leave the European Union.
A big majority would provide political certainty for the next five years, giving Prime Minister Theresa May a freer hand in the Brexit negotiations to make the compromises necessary for a deal. She would, the reasoning goes, be able resist calls from some in her party who are prepared to see Britain leave without any sort of trade deal that would provide business easy and cheap access to the EU single market.
Source: Associated Press