The pound has strengthened after Labour won a landslide victory in the general election.

Sterling has gained 0.2pc against the dollar to $1.277 since the first exit poll put Sir Keir Starmer on course to enter Number 10.

Labour is on track to win 410 seats, with the Conservatives expected to return just 131 seats, a fraction of their 365 MPs in 2019.

The FTSE 100 is poised to open 0.2pc higher when trading begins later, with a big Labour majority having largely already been priced into financial markets.

Deutsche Bank chief economist Sanjay Raja said markets will turn their focus to the upcoming King’s Speech to understand Sir Keir Starmer’s priorities for his first year in Government.

He said: “While the Labour Party’s manifesto pledges amount to very little additional public sector spending, more important for the economy (and markets) will be the policy measures Labour has yet to fully flesh out. 

“Here, four things matter most: investment (via its National Wealth Fund), defence, planning reform, and trade with Europe. These pose meaningful upside risks to GDP growth, including potential growth.”

Krishna Guha, an analyst at Evercore, said that “for the first time in years, the UK will be a relative island of political stability” which he said would likely moderate the risk premium paid on British assets and potentially boost asset values.

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