LONDON — The pound has stabilised from its sharp drops of last week but has failed to recover to the levels of before the general election.
Sterling dropped sharply on Thursday evening after the exit poll initially showed that no party would win a majority in the House of Commons and resumed its sharp slide in early trade in London on Friday morning after it became clear that the election had returned a hung parliament.
However, after news broke that May would visit the Queen and seek to form a new government, the currency stabilised, and the market remained calm after she officially confirmed that she will lead that government.
But Sterling is at around $US1.27, still short of the mid-$US1.29 range of June 7 — the day before the election.
The Conservatives failed to win 326 seats in the general election — the number needed to have an outright majority. But the party still won the largest number of seats and votes — with 318 seats and 12,667,213 votes (42.8% of the overall vote).
Prime Minister Theresa May is now trying to form a minority government with Northern Ireland party DUP leader Arlene Foster. There were statements from Downing Street that the DUP had agreed to the terms of a so-called confidence and supply deal. But the following day, the government backtracked on the statement.
Meanwhile, reports say that May’s cabinet reshuffle is hinting at a “soft Brexit” — access to the Single Market but also adhering to the principles of the EU, like the Freedom of Movement act. It’s pretty much the same Britain has now as an EU member but with a financial cost and the loss of negotiating power over EU legislation once it leaves the bloc.
A “hard Brexit” — something that May was initially pushing for — meant severing ties with the Single Market for total control of immigration.