The Great Britain pound experienced heavy losses during the Asian trading session on Friday after Britain’s snap election resulted in the worst possible outcome — a hung parliament.
UK Prime Minister Theresa May announced a snap election in a bid to consolidate the power and strengthen her positions in Brexit negotiations with the European Union. That looked a reasonable move at first as initially polls were showing a tremendous support for May’s Conservative party. Yet in the end, her decision backfired spectacularly as the worst possible scenario, a hung parliament, became a reality. With 316 seats, the Tories fell short of the 326 mark needed to have a majority.
It is no surprise that the sterling sank after the outcome of the voting had become clear. Yet the losses were not as big as many market participants were expecting. Some analysts explained that by anticipation of softer Brexit after May lost the election as the Prime Minister will have less support in her hard stance towards talks with the EU.
GBP/USD dropped 1.6% from 1.2953 to 1.2740 as of 9:00 GMT today, falling to the low of 1.2640. GBP/JPY declined 1.3% from 142.40 to 140.46, touching the low of 139.51. EUR/GBP rallied 1.4% from 0.8651 to 0.8769, and its daily high of 0.8853 was the highest since since November 9.
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