Britain’s political future was thrown wide open after a shock exit poll indicated that Prime Minister Theresa May might not win a majority after Thursday’s general election, casting doubt over her political future just days before Brexit negotiations were due to begin. 

The pound fell to the lowest since April after the BBC and other broadcasters said May’s Conservative Party is on course to win just 314 seats in the 650-strong House of Commons. That’s down from the 330 she held before calling the snap election seven weeks ago and less than the 326 needed for a majority. Jeremy Corbyn’s Labour Party will win 266 seats, compared with 229 before the election, according to the joint exit poll. 

Such polls have generally been reliable, although political leaders on both sides immediately said it’s too early to read too much into it. The first two results from northeast England indicated that Labour is not doing as well as the exit poll suggested.

Investors are balking at the prospect of another round of political turmoil less than a year after Britain voted to leave the European Union. While May could still win a majority, attention will turn to her future after the decision to call an early election and strengthen her mandate backfired. She will now need to decide whether to resign or try to form a new government. Another election is also a possibility.

David Fuller's view

Obviously this creates even more uncertainty for the UK, reflected by sterling (GBP) which has slipped to £1.775 as I write, down -.0181.

Inevitably, it has weakened Britain’s Brexit negotiating hand with the EU. 

I expect another General Election within the year and possibly quite soon, although that would be unpopular with many voters.