Sterling soars after announcement of snap election, but FTSE 100 worst day since Brexit

Following Theresa May’s shock announcement yesterday of her plan to call a general election on 8 June British Pound Sterling climbed to its highest level in more than six months. The pound climbed by 2.7 per cent to a five-month high of $1.2905 on Tuesday, breaking a downward trend for the first time since Britain voted to leave the EU last June.

This surge is based on the expectation of a larger Conservative majority in the election and strengthening Mrs May’s position for a ‘softer’ Brexit against hardline Eurosceptics. Currency strategists have said the announcement by Mrs May reduces existing political uncertainty and the likelihood of a ‘hard Brexit’.

Deutsche Bank described the snap election as “a game-changer” for the Pound, adding that it would raise its sterling forecasts in the coming day.

UK blue-chip shares suffered their worst daily decline since the country voted to leave the EU, with the FTSE 100 dropping 2.5 per cent to close at 7,147.5 yesterday.