Theresa May’s gamble to trigger a general election ahead of Brexit negotiations has backfired as sterling has fallen on an unexpected swing to the Labour Party.
Sterling fell 2 per cent initially hitting a two-month low of $1.2693, but has since regained some ground.
The fall in sterling is set to hit the FTSE 250.
Nigel Green, chief executive of deVere Group, says: “Volatility is the only certainty in these uncertain times.”
Eugene Philalithis, portfolio manager of Fidelity Multi Asset Income, says it is now unclear who will conduct Brexit negotiations on behalf of the UK or the aims of any negotiations.
JP Morgan has warned in a research note this morning that the UK may have to request a delay to Brexit negotiations.
In the lead up to the election, the EU reportedly said it would do so if Labour leader Jeremy Corbyn won.
Under Labour, Keir Starmer would become Brexit secretary, supported by Emily Thornberry and Barry Gardiner.
“We are a long way from a strong and stable government,” says Embark Group CIO Peter Toogood.
“The pound will take the strain initially but a more redistributive and left-leaning government is a distinct possibility, which is unlikely to be particularly supportive for risk assets.”