The pound has climbed sharply against the dollar and the euro as the Conservatives secured a majority in the general election.

Sterling added more than three cents versus the US currency to $1.35, a 19-month high.

It was also up by as much as three cents versus the euro to €1.21 – the highest level since July 2016.

The pound shot up after an exit poll on Thursday night predicted a comfortable majority for the Tories.

It held onto the gains as results from election counts around the country confirmed that Boris Johnson’s party had won.

Pound rockets after exit poll

But the currency did not power much further ahead after the exit poll.

It remained well off its level at the time of the Brexit vote when the pound was trading at around $1.50 versus the dollar.

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Ranko Berich, head of market analysis at Monex Europe, said the events of the night represented “a material reduction in overall uncertainty”.

But he added: “The trajectory of trade talks remains a major unknown for sterling at the moment.

“With a stronger hand for dealing with Eurosceptic hardliners, Johnson is in a position to offer concessions for a free trade deal, such as the border in the Irish Sea that enabled his withdrawal agreement breakthrough.

“But a strong majority could prove a double-edged sword for sterling as the new government could decide its majority means it has a strong hand for hardball tactics with the EU.”

Boris Johnson and Carrie Symonds arrive at the Conservative Party's headquarters
Election: Story of the night so far

The pound’s performance has been the key barometer of market confidence in the UK since it slumped in value after the vote to leave the EU in 2016.

Traders will now believe Mr Johnson is in a good position to deliver an orderly exit from the European Union on 31 January after years of political uncertainty.

But there are fears of more volatility for the pound as the prime minister faces the tough task of negotiating a future trade agreement with the EU in just 11 months before the Brexit transition period ends in December 2020.

Dean Turner, economist at UBS wealth management, said: “Brexit isn’t yet really ‘done’ and attention will quickly turn to the future trade relationship.”

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