UK shares and the pound rose on Friday after Prime Minister Boris Johnson’s Conservative party secured a resounding general election victory that could clear the way for the UK to leave the European Union.

Johnson’s Conservative Party won 364 seats to the Labour Party’s 203. 

In Scotland, the SNP won 48 of the 59 seats. The SNP won 45% of the Scottish vote — 8.1% more than in the last UK general election in 2017, when it won 35 seats.

The FTSE 100 rose 1.5% in early trade and the FTSE 250 index of midsize companies soared more than 4%.

The pound strengthened more than 2% against the dollar at one stage — its highest level since May 2018 — before giving back some gains and settling at around $1.3315, a 1.16% rise. 

Sterling also rose 1.3% against the euro at one stage before settling at around €1.1930, up 0.8965%.

“Just as Boris Johnson was desperately seeking his majority, this result would give the markets their ultimate wish: clarity,” said Dean Turner, Economist at UBS Wealth Management.

But some market analysts struck a more cautious note.

“Brexit isn’t yet really ‘done’, and attention will quickly turn to the future trade relationship,” said UBS Wealth’s economist Turner.

“This phase looks set to be every bit as difficult as the last, with just over 12 months until the transition period ends on 31 December 2020.”

Paul Meggyesi, head of global foreign exchange strategy at JP Morgan, wrote in a note to clients: “The level of the exchange rate now virtually disregards the damage which Brexit has so far caused to the economy, let alone the possibility of any incremental damage from the delivery of a Brexit with still uncertain prospects for a future trade deal.

“It seems to us that the market is in danger of conflating the removal of political uncertainty with the reversal of the economic impact of Brexit.”

Joel Kruger, currency strategist at LMAX Exchange, said” “Markets will start focusing on the longer-term outlook of what a future trade relationship with the EU will look like and the pound’s gains will be capped in the $1.35-$1.37 area.”