Pound plunges as shock exit poll announced

The pound plunged as financial markets were rocked by the shock exit poll suggesting Theresa May could lose her overall majority.

Earlier on election day, sterling had hit a two-week high of $1.2978 after polls had predicted a comfortable victory for the Prime Minister's party.

But in the moments after the Conservatives were predicted to be the largest party, but with fewer MPs, the currency dived to around $1.2730 - its lowest point since the election was called in April.

The result would plunge domestic politics into turmoil and could delay Brexit talks - inflicting months of further uncertainty on businesses and financial markets.

Sky News Economics Editor Ed Conway said: "Yet again there's been another shock to the system.

"Traders out there who were nervous about that exit poll but thought there was going to be an overall majority - you can see what they're doing, they're selling the pound."

The exit poll predicted the Tories would fall short of the 326 seats needed to take office alone, meaning Mrs May would have to form a coalition or attempt to govern with the backing of other smaller parties.

Political deadlock in London could derail Brexit negotiations with the other 27 EU countries before they even get started in earnest.

A delay in forming a government could push back a planned 19 June start date for the talks and squeeze the time available for what are expected to be the most complex negotiations in post-World War Two European history.

Mrs May called the election asking the public to back her plan for a so-called hard Brexit that prioritised control over immigration, with Britain leaving the single market and customs union.

If she fails to win a majority, her position as Conservative leader could be called into question - raising the prospect of another election later in the year.

A Jeremy Corbyn-led government would be likely to rattle financial markets further after the veteran socialist's manifesto pledged a corporation tax hike and income tax rises for the UK's richest 5%.

Labour promised to push ahead with Brexit but said it would scrap the PM's plan and prioritise keeping the benefits of the EU single market and customs union.

(SKY NEWS)