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Pound soars as Johnson scores landslide British election win

LONDON (Reuters) – The pound surged more than 2% on Thursday as Prime Minister Boris Johnson’s Conservative Party won a resounding election victory that markets believe makes an orderly British exit from the European Union all but certain.

Sterling reached a 19-month high versus the dollar and its strongest levels against the euro since shortly after the 2016 Brexit referendum.

Its jump – as much as 2.5% – versus the dollar put it on course for its biggest one-day gain in nearly three years, a remarkable gain for a currency that has become extremely volatile since the referendum.

Chastened by 3-1/2 years of political instability in Britain, investors seized on the expected Conservative landslide, believing it will enable Johnson to deliver Brexit on Jan. 31.

That would end immediate fears about the United Kingdom crashing out of the EU.

“Just as Boris Johnson was desperately seeking his majority, this result would give the markets their ultimate wish: clarity,” said Dean Turner, Economist at UBS Wealth Management.

Johnson’s Conservatives were on course to win a comfortable majority of more than 70 seats in the 650-seat parliament in what could be the biggest Conservative national election win since Margaret Thatcher’s 1987 triumph.

The Conservatives claimed a string of Leave-supporting seats from Labour in the opposition party’s heartlands of Wales and northern England, results showed.

The pound rocketed 2.5% higher to $1.3516 GBP=D3 – its highest since May 2018 – in the immediate aftermath of the exit polls. It later settled at $1.3472, up 2.3% on the day.

Against the euro, sterling rose as high as 82.80 pence EURGBP=D3, up more than 2% on the day, leaving the pound at levels last seen in July 2016,

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