The pound jumped the most since 2009 as Britain's Conservative Party was on course to retain power after a general election. Chinese stocks rebounded from their worst three-day drop since 2013 and Asian bonds rallied.
The British currency climbed 2.2 per cent to 72.29p per euro by 4.37pm yesterday - the biggest increase since January 2009, based on closing market data. It rose 1.8 per cent to US$1.5514.
The Conservatives looked to be on course to be the largest party in Parliament with a narrow majority as results rolled in yesterday. China's exports shrank 6.2 per cent in April, adding downward pressure to the economy and spurring speculation of more stimulus. Investors are also focused on US payrolls today to determine the timing of an interest rate increase.
"The market was expecting a messier, closer-run outcome in the exit poll," said Daragh Maher, a foreign-exchange strategist at HSBC Holdings in London. "The fact that it signalled a clear upside surprise for the Conservatives has helped the pound on two fronts. Perhaps the market was a bit short pound into the poll expecting a tight call, and now that is being unwound."
The exit poll predicted the Conservatives would win 316 of Parliament's 650 seats, more than in the last election in 2010, with the Labour Party trailing on 239 seats. As the first results were declared yesterday Labour had failed to gain key target seats in central England.
