With the prospect of no party securing a majority in the British parliament, the country has plunged into uncertainty less than two weeks before key “Brexit” talks are scheduled to start.
Multiple parties hammering out a coalition government looks the most likely outcome. Investors fear this could potentially delay negotiations with the European Union, however, a cross party compromise could also lead to a softer Brexit.
This may ultimately turn out to be positive for financial markets, which have always favoured retention of the single market. Analysts believe that a political risk premium will hang over the sterling until the volatility fades.
This should put a near-term ceiling on the currency. GBPJPY shed as much as 2.00% to last trade around 140.150.