GBP optimism was proved right
Throughout the election campaign, GBP has been trading with a positive slant in anticipation of a Boris Johnson win - and win he has, and with a resounding majority which sees him return to Number 10 with a strong majority. This not only suggests that he will be back pursuing the Brexit deal he agreed with the EU ahead of the call for the snap election, but also that the whole Brexit process can finally move on without the many obstacles which the lack of majority prior to this has led to. His Tory party has won by 358 seats to Labours 2003, with the exit polls suggesting this as soon as the polls closed at 10.00 pm last night.
GBP immediately reacted to this exit poll and stormed higher, taking out 1.3300 swiftly and going on to tip the first major target at 1.3400. Thereafter, gains were a little slower, but we managed to move on and take out 1.3500, beyond which gains really started to slow and we are back under 1.3500 this morning. Traders will do well to remember that this only really means that the UK government can now get on with stage one of the Brexit process and that the negotiations on a trade deal will present many more ups and downs for GBP as well as other GBP assets.
We also saw EUR/GBP diving down to 0.8300, but again, the move began to lose steam beyond this point and as we noted yesterday, the band of support in the 0.8150-0.8250 represents another obstacle for GBP bulls at the present time.
For Labour, this terrible night which saw them achieving the worst results for over 50 years has meant that Jeremy Corbyn will step down as leader, with the Brexit issue and his far-left stance both seen as key factors in Labour losing much of its vote last night. His neutral stance on Brexit worked against him and the party, with a number of Labour constituencies having voted to leave (Brexit).
It was also a bad night for the LibDems, whose leader Jo Swinson also lost her seat to the SNP. Strong gains for the SNP will now also bring back a Scottish referendum onto the agenda.