The British pound surged against all major currencies, including the Norwegian krone, after Johnson’s Conservative Party won a decisive victory at the elections, allowing the prime minister to deliver on his Brexit promise by January 31.
The general elections that redrew the political map of Britain sent the pound to multi-year highs against the US dollar and euro, and UK government bonds may come under selling pressure during the day as Brexit uncertainties lift.
As of Friday morning, forecasts show that the Tories would win 362 out of the 650 seats in the House of Commons, giving the party an overwhelming majority of 37 seats. Johnson’s victory allows him to “get Brexit done” in less than two months and start negotiating a trade agreement with the EU, bringing an end to more than a year of parliamentary gridlock.
Corbyn’s Labour Party is set to win around 202 seats, making it the fourth consecutive election defeat and one of the worst results since 1935 as voters rejected his radical agenda of industry nationalization and state intervention. Jeremy Corbyn announced he would step down as leader of the Labour Party after the results came out.
The UK election results took away a key risk in the markets, especially as it follows an initial phase-one trade deal between the US and China. Gold was down and futures on major stock indices were up at the time of writing.
Some investors decided to stay at the sidelines ahead of the election and many market participants were short on UK equities and sterling since 2016, giving the currency more upside potential as investors start to reposition their portfolios.
As of 7:10 a.m. London time, the British pound traded at 12.1520 against the Norwegian krone, marking an impressive jump of 1.85% after the pair completed a pullback to the 11.90 support area on Thursday.