Boris Johnson has won the U.K. election and is set for the biggest Conservative majority since Margaret Thatcher. News of the predicted win sent the pound sharply up and is likely to see markets rise.
Johnson’s Conservative party is on course for 368 seats, which would give him a majority of 86 over the opposition Labour party. This would be the biggest majority since Margaret Thatcher’s third election win in 1987.
The pound surged around 2% to $1.346 after the poll.
In one of the first results to come in, the Conservatives won the Blyth Valley seat in the North East of England, which has been Labour since 1950.
Britons voted at the polls Thursday to decide the new leader in an attempt to resolve the Brexit crisis.
Prime Minister Boris Johnson took a gamble asking the public to clear the political logjam that has prevented the U.K. from leaving the European Union in what some say is the most important vote since World War II.
The vote pitched Johnson, who says he will take Britain out of the European Union by Jan. 31, against Labour leader Jeremy Corbyn, who promised another referendum on Brexit.
A strong majority would give Johnson plenty of support to pass a Brexit deal through Parliament.
Krishna Guha, an analyst at Evercore ISI, wrote in a note that the most likely outcome is that Johnson’s Conservatives will win a modest majority and move ahead with his Brexit deal plus domestic agenda.
“But this is a low conviction consensus,” he said. “Most polls and expert analysis put substantial probability on a hung parliament in which the Conservatives fall short and a left-center rainbow coalition backing a second Brexit referendum could come to power as well as a bigger Conservative win.”
Read: Here’s everything investors need to know ahead of Britain’s election
The uncertainty during the day caused the price of gold GC00, -0.01% to rebound.
Carlo Alberto De Casa, chief analyst at ActivTrades said: “After a long phase with very little volatility, investors are awaiting the price to breakthrough the key level of $1,475 in order to give bullion a more defined direction.
“Technically, the price remains in the lateral channel between $1,450 and $1,475 but with growing pressure on the upward edge. This confirms investors’ interest in bullion is returning on the day of the UK election and the meeting of the ECB.”
A Stock Market Almanac study pointed out that the Conservatives and Labour won nine general elections each between 1945 and 2010. In eight out of the nine years following a Conservative victory, the FTSE All-Share index ASX, +0.76% rose, with an average 10.8% gain. The market rose in just three of the nine years following a Labour win, with an average negative return of 5.8%. The same study highlighted that returns tend to be negative in the month and week before an election, while returns after an election tend to be low.
However, none of those elections featured Brexit, and the 2019 vote will have its own set of factors and consequences for equities and the pound.
Read: The Pound Is Undervalued and Looks Set to Rally After the U.K. Election
The pound jumped to $1.34 from $1.31 in the wake of the exit poll which is up from $1.29 last week, as investors grew more confident of a Johnson win. But sterling GBPUSD, +2.3397% GBPEUR, +1.9702% has been up and down in recent weeks as investors have reacted to the latest election polls.
The pound dropped at the end of November after two election polls showed that Johnson’s lead had narrowed, demonstrating investors’ fear at the prospect of a Labour government.
BT Group BT.A, -0.50% , which Corbyn said he would partly nationalize to provide more broadband access, slipped 0.2% on Thursday and has dropped nearly 3% over the last month.
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