The pound has fallen sharply after the UK’s general elections resulted in a hung parliament.
The currency’s value had dropped overnight, and as trading began in London it slipped further, standing 2.3% lower at just below $1.27, with markets worried about heightened political uncertainty.
Against the euro, the pound was down 2% at 1.1344.
However, UK’s shares opened higher with the benchmark FTSE 100 index up 1.3% at 7,544.78 points.
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A fall in the value of the pound tends to boost the FTSE 100 as the majority of companies in the index have significant operations overseas. A weaker pound means profits earned abroad are worth more when converted back into sterling.
The projection is that the Conservatives will be the largest party with 318 seats – eight short of a majority.
While the pound’s move is significant, it is far less striking than that seen in the aftermath of the Brexit vote in June 2016, when it plunged more than 10%.
Some analysts say that might reflect the diminishing prospect of a “hard” Brexit.
Sterling initially fell after an exit poll was released as the polls closed at 22:00 cast doubt on an overall Conservative majority, raising concerns about increased uncertainty and a possible delay to Brexit negotiations.
Sterling has been trading in a range between $1.28 and $1.30 in recent weeks.
Conservatives have lost their majority in the UK’s snap general election that has resulted in a hung parliament.
With just a handful of seats left to declare, June 8 poll shows gains for the opposition Labour Party.
This is seen as a humiliation for PM Theresa May, who chose to call the election to try to strengthen her hand in talks with the EU on Brexit.
Labour leader and Theresa May’s main rival, Jeremy Corbyn, urged her to resign, but she said her party would “ensure” stability in the UK.
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She said on June 9: “At this time more than anything else, this country needs a period of stability.
“And if, as the indications have shown and if this is correct that the Conservative Party has won the most seats and probably the most votes, then it will be incumbent on us to ensure we have that period of stability – and that is exactly what we will do.”
Theresa May – who had a small majority in the previous parliament – had called an early election to try to improve her negotiation positions on Brexit.
However, EU Budget Commissioner Günther Oettinger told German radio he was unsure Brexit talks could start later this month as scheduled. He said discussions with a weak UK negotiating partner could lead to a poor outcome.
Jeremy Corbyn earlier said: “If there is a message from tonight’s results, it’s this: the prime minister called this election because she wanted a mandate. Well, the mandate she’s got is lost Conservative seats, lost votes, lost support and lost confidence.”
“I would have thought that’s enough to go, and make way for a government that will be truly representative of all of the people of this country,” he added.
Final election results are expected on June 9 at midday.
The biggest shock of the night so far has been Liberal Democrat Nick Clegg losing his seat to a Labour candidate. He was deputy prime minister of the UK from 2010 to 2015 in a coalition government with the Conservatives.
Former Scottish National Party leader Alex Salmond was also defeated, losing his seat to a Conservative.
A total of 650 Westminster lawmakers are being elected, with about 45.8 million people entitled to vote. A party needs 326 seats to have an overall majority.
Voting is under way in the UK at more than 40,000 polling stations across the country.
Polls opened at 07:00 BST on June 8, with counting starting once voting ends at 22:00 BST.
A total of 650 Westminster lawmakers will be elected, with about 46.9 million people registered to vote.
That is up from the last general election, in 2015, when there were 46.4 million registered voters.
Some votes have already been cast, through postal voting, which accounted for 16.4% of the total electorate at the 2015 general election. People with an undelivered postal vote can still deliver it by hand to their local polling station.
Two years ago, when the Conservatives won 331 out of 650 seats, overall turnout was 66.4%, up from 2010.
Most polling stations are in schools, community centers and parish halls, but pubs, a launderette and a school bus have been used in the past.
Police have increased security at polling stations, including patrols by armed officers in some areas, following the recent terror attacks.
A handful of seats are expected to be declared by midnight, with the final results expected on June 9.
Unusually, no local elections are taking place at the same time, so results might come through earlier than in recent general elections.
In 2015, the first seat to declare was Houghton and Sunderland South, at 22:48 BST.
To form a majority in the House of Commons one party must win 326 seats – in 2015 a Conservative majority was not confirmed until 13:34 BST.
Polls close at 22:00 BST, but officials say anyone in a polling station queue at this time should be able to cast their vote.