Most major currencies stuck to recent ranges ahead of U.S. jobs report later on Friday, but sterling seized the spotlight and rallied to its highest in just over a week on expectations that British Prime Minister David Cameron’s Conservatives will stay in office.
The Conservatives are set to govern Britain for another five years although they may fall just short of holding an outright majority, an exit poll showed, a result likely to trigger an in-out referendum on European Union membership within two years, while Scots could soon be pressing for independence again.
“An EU referendum would be the main longer-term focus. We have to wait to see what Cameron says, and then what kind of coalition government he assembles,” said Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank. “The pound is initially rising on the exit poll results, and pound volatility is also likely to rise.”