Sterling is ending the day with solid gains, although it’s not quite as rampant as 12 hours ago when this blog started.

Against the US dollar, the pound is worth $1.334, its highest level since March, and very nearly an 18-month high.

It’s now gained 11 cent, or 9%, since the UK and EU started to renegotiate the Brexit deal in October.

Against the euro, sterling is at exactly €1.20 for the first time since April 2017. That was the month when former PM Theresa May called a general election, hoping for the kind of majority which Boris Johnson is now enjoying.

Fiona Cincotta of City Index predicts more sterling volatility, once the UK and EU try to negotiate their future relationship.

The clear majority that Boris Johnson achieved could give him more scope for getting an extension to the transition period agreed to. He would no longer be so dependent on the hard-line Brexiters and European Research Group. However, there is also the risk that Boris Johnson won’t want to extend the transition period given that his motto was “get Brexit done” and with such a solid majority he has a clear mandate to do just that.

Until we get further clarity on the transition period, the pound might struggle to advance beyond $1.35 in the short term. The start of the first half of 2020 could still see considerable uncertainty.

Boom! Britain’s stock market has closed after a dramatic day’s trading.

Many UK companies have surged in value following yesterday’s election result, in the biggest day’s trading volumes in two and a half years.

The FTSE 100 index of blue-chip stocks has closed 79 points higher at 7353 points, its highest level since the end of November. That’s a 1.1% gain today, held back by falling multinationals.

Llook beneath the hood, and you can see the housebuilders such as Taylor Wimpey, Barratt and Berkeley rocketed by between 14% and 15%.

Utilities firms also had a very strong day, with water company Severn Trent gaining 9% and energy provider Centrica up 8.7%.

Banks also led the rally, on hopes that the UK economy will pick up as the threat of an imminent disorderly Brexit vanishes.

Trading volumes hit 1.8 billion, more than double an average day, and biggest since June 2017 after the last election.

The UK-centric FTSE 250 index has closed at a new all-time high, romping by 3.4% to 21,507 points at the close, up 714 points.

Again, some British firms soared in value, with Virgin Money gaining 18%, Stagecoach up 16%, and estate agent Savills up 13%.

By my maths, that has raised the combined value of the FTSE 100 and FTSE 250 by around £33bn today.

Ken Odeluga of City Index says Boris Johnson’s win brought a surge of “animal spirits” to the City.

The two halves of the UK stock market continue to relish the best of both worlds after the Conservatives’ landslide swept away uncertainty, potentially paving the way for a broad re-rating of British equities. On paper, that eventuality looks entirely possible. In practice, the political breakthrough will continue to favour a more elastic and nimbler take on sterling’s ascendancy and the notion that it favours UK-orientated over internationally focused stocks.

First though, there’s no harm in soaking it in. In fact, with Britain’s stock market as a whole languishing among the world’s worst-performers over the last three years, investors probably need to celebrate the return of animal spirits of the bullish kind.

Newsflash: Donald Trump has announced that the latest tariffs scheduled to hit China on Sunday are being cancelled.

He’s just tweeted that a “very large” phase one deal has been agreed with China, in which Beijing will buy more US agricultural goods and oil.

In return, Washington is dropping for 15% tariffs on $155bn of Chinese consumer goods and tech.

It looks like he’s also halving the 15% tariff on $112bn of Chinese goods, to 7.5%, while leaving another tranche of tariffs unchanged.

The surge in the UK stock market today is good news for some of Britain’s billionaire bosses.

Executives with large stakes in their companies saw their net worths spike, as the possibility of a Labour government receded. Several are notable Brexit supporters.

The 16 Brits on Bloomberg’s Billionaires Index -- including Jim Ratcliffe and James Dyson -- added around $2.8 billion to their combined net worth on Friday.

Bloomberg explains:

Peter Hargreaves, one of Brexit’s biggest supporters, has plenty to celebrate.

The Conservative Party’s victory didn’t just make Britain’s departure from the European Union certain. It also provided a $300 million boost to his fortune on Friday as investors welcomed the result.

The Lancashire-born billionaire owns about a third of Hargreaves Lansdown Plc, whose shares rose 4.1% as of 12:40 p.m. in London, boosting the value of his stake to $4.1 billion and his overall fortune to $4.6 billion.

“I’m very relieved,” Hargreaves said, while blaming the Labour Party’s disappointing showing on Jeremy Corbyn’s lack of appeal. “I was in contact with lots of friends in the North and they were quite surprised how many Labour voters in the North weren’t going to vote for Corbyn. They were petrified of Corbyn.”

Meanwhile in America.... Donald Trump has just denied reports that he had agreed a preliminary trade deal with China.

The WSJ reported last night that Trump had agreed to lower some existing tariffs on Chinese goods, as well as suspending the ones due to kick in on Sunday.

It said:

Michael Pillsbury, an adviser to the president, said he spoke with Mr. Trump, who said the deal calls for China to buy $50 billion worth of agricultural goods in 2020, along with energy and other goods. In exchange the U.S. would reduce the tariff rate on many Chinese imports, which now ranges from 15% to 25%.

The Wall Street Journal reported earlier Thursday that the U.S. side has offered to slash existing tariff rates by half on roughly $360 billion in Chinese-made goods, in addition to canceling the tariffs on $156 billion in goods that Mr. Trump had threatened to impose on Sunday. That offer was made to Beijing in the past five days or so.

Or NOT, according to Mr Trump. We flagged up earlier that China had not confirmed these reports. Beijing is holding an evening briefing with reporters any moment, so we might learn more soon....

Time for a recap, as City traders snatch a lunchtime sandwich (or possibly 40 winks) on one of the busiest days of the year.

Shares in UK companies have surged after Boris Johnson won a surprisingly large majority in Thursday’s general election.

The FTSE 250 index is trading at a record high, with British-focused firms surging in value. It’s currently up more than 4%, or 865 points, at 21658.

The blue-chip FTSE 100 is trading at a two-week high, despite international companies suffering from a much stronger pound today.

Housebuilders such as Taylor Wimpey (+14%) and Berkeley Group (+13.5%) are leading the charge. They are followed by utilities -- who no longer fear nationalisation under a Corbyn administration - and banks, who should benefit if growth picks up.

The burst of selling has already seen trading volumes hit 1.14bn, or around 50% more than the usual average for a full day.

Sterling also surged after last’s exit poll showed the Conservatives had done better than analysts expected, with both Labour and the Liberal Democrats having a dreadful result.

The pound hit an 18-month high of $1.35; it’s currently back at $1.336, up over two cents today in a solid rally. Some investors suspect it could rally back to $1.40, nearer to levels seen before the EU referendum in 2016.

The pound has also hit a three-year high against the euro over €1.20, a gain of two eurocents.

Investors are relieved that years of uncertainty and indecision over the UK’s path out of the EU are finally coming to end, replaced with the certainty of Breit on 31st January.

As Ritu Vohora, Investment Director at M&G Investments, puts it:

“There are few certainties in politics, but the outcome will provide more clarity about the direction of travel for Brexit than the market has seen since the 2016 referendum result, with the UK almost certain to leave the EU by 31 January.

The scale of this win is a also a big personal victory for Boris Johnson - any leader that can deliver such a large majority after the party has been in government for almost a decade will have a high degree of personal authority and will be able to command loyalty.

Chancellor Sajid Javid has insisted that the UK economy will receive a deal dividend from Brexit. The lifting of political uncertainty is already luring some investors to Britain, he claimed.

But several analysts, including the rating agency Moody’s, have warned that uncertainty over Britain’s new trading relationships will weigh on the economy in 2020.

Chancellor Sajid Javid has said the election result is good news for the economy.

Speaking on Sky News, Javid insisted there will be “a deal dividend” from carrying out Brexit, adding:

Look at the reaction of the financial markets.

Q: But investors expect growth to be slower because of Brexit.

Javid denies it, adding that some international investors are already implementing investment plans.

In terms of the economy and going forward, business after business wanted an end to the uncertainty.

Already, because of the election result, I know this morning there are investors that have decided to deploy money, invest money, in the United Kingdom....because they know that the uncertainty will now end.

But he refused to name these investors, suggesting that some could come forward tomorrow.

There will be a deal dividend because of this election.

Forecasters don’t agree, though. In October, the NIESR think tank estimated that the economy will be 4% smaller by the end of the 2020s under Brexit, compared to staying in the EU.

Michael Stiasny, manager of the M&G UK Income Distribution Fund, has identified two medium-term issues for the markets:

Any suggestion that the size of the Conservative majority makes no-deal at the end of 2020 more likely, and the prospect that with more economic certainty the Bank of England under new leadership takes a more hawkish stance with interest rates.”

We might get clarity on that latter point imminently: Francis Elliott of The Times predicts that Mark Carney’s successor could be announced very soon.

Carney’s term expires on 31 January, the day Britain will be leaving the EU, so the decision needs to be taken pronto.

Rating agency Moody’s is trying to bring the City back to earth, by reminding investors that the Brexit process isn’t over.

Sarah Carlson, Moody’s Senior Vice President, predicts another deadline crisis in 2020 if Boris Johnson insists on trying to agree an EU trade deal in a year.

“Today’s result of a Conservative majority means that Brexit is likely to occur quite quickly. However, Brexit-related uncertainty is unlikely to abate for more than a few months, given the relatively short transition period to which the Prime Minister is currently committed.

She adds that Britain’s economy still has plenty of problems to be solved:

The UK’s other credit challenges, such as heightened fiscal risks and low productivity, will remain material in the absence of significant policy shifts.”

Last month, Moody’s lowered its outlook on UK government debt to negative, which could lead to a downgrade.

Britain’s FTSE 250 index, which contains medium-sized UK-focused companies, has surged by 5% this morning -- a really dramatic move.

The index (smaller than the FTSE 100) has gained over 1,000 points to 21,910, an all-time high.

Relief that Britain has avoided a hung parliament, and the risk of a no-deal Brexit in January, is driving stocks higher.

Virgin Money is up 17%, with transport firm Stagecoach gaining 12% and building materials firm Travis Perkins up 10%.

Here are the top risers on the FTSE 100 index this morning.

The blue-chip index has gained 70 points, or over 1%, despite being dragged back by the multinational firms who earn their profits abroad.

The big picture is that sterling is at its strongest level against the euro in three years, as fears of a disorderly Brexit next month are banished.

The pound is holding firm over €1.20 -- it’s not closed that high since June 2016.

Against the dollar, it’s holding steady at an 18-month high.

Emma Wall, head of investment analyst at Hargreaves Lansdown, says the size of Johnson’s win has surprised the City

“What a night! While the polls – and indeed the markets – were prepared for a Conservative win, it certainly wasn’t of this magnitude.

Adrian Lowcock, head of personal investing at Willis Owen, agrees:

“Investors are going to be relieved, and the pound has already rocketed on the back of the exit polls as fears of a hung parliament were removed.

In terms of markets today, a Conservative majority is likely to be well received as it unlocks the political process, gives some certainty over Brexit and removes the risks of the anti-business policies of the labour manifesto, such as nationalisation.

This chart shows how the pound surged to an 18-month high as soon as the exit poll was released.

It continued to climb as early results came in, smashing $1.35. That’s a gain of around 2.5%, or three cents, one of its biggest surges in a decade.

Richard Buxton, head of UK equities, Merian Global Investors, believes the pound could his $1.40 soon.

The pound’s breaching of 1.20 versus the euro feels significant, and I would not be surprised to see sterling strengthen further from here.

Similarly, at the time of writing, the pound was trading at around 1.35 versus the US dollar; from here, it wouldn’t seem too outlandish to suggest that 1.40 could soon be within reach.

That would still be below the $1.50 struck on the EU referendum day.

Traders across the City have been working through the night, reacting to the election results.

My colleague Kalyeena Makortoff is at ETX Capital, where staff have relied on a diet of pizza, Sky News and Twitter to get them through the night.

The surge in the pound was obviously the biggest move, which could weigh on the internationally-focused FTSE 100.

David Papier, head of sales at ETX, explains:

“We’ve seen an increase in sterling against other majors but not going to have a massive negative effect on the FTSE.

Yes, we may see a drop-off in the FTSE in the morning, but not going to be as aggressive as the movement in sterling.”

Good morning.

It’s a Blue Friday in the financial markets, as the Conservative Party secures a stunning election victory in Thursday’s general election.

Sterling has been flying since last night’s exit poll showed Boris Johnson was on track for a big win, and has remained strong as key seats across the country have changed hands.

The Conservatives are now guaranteed a majority, with the latest expectations are for between 78 and 82 seats.

Against the US dollar, sterling has rocketed by three whole cents to around $1.35 -- an 18-month high.

Against the euro, sterling has smashed through €1.20. It’s now trading at €1.206 for the first time since July 2016, shortly after the EU referendum.

Investors are relieved that clouds of Brexit uncertainty are now lifting, somewhat. Britain is now clear to leave the EU on 31st January 2020 under Johnson’s deal.

But that will trigger a second phase, and a new deadline of December 2020, to arrange a new trade deal with the EU.

Lee Hardman, currency analyst at MUFG, says the snap election has “well and truly paid off” for Johnson.

It’s the best outcome for financial markets in the near-term. It brings a clear end to the Brexit deadlock in parliament, which will be welcomed and help to ease some of the ongoing uncertainty.

The risk of a “No Deal” Brexit will pushed out until the end to next year, and the new government will not be as reliant on securing support from hard Brexiteers during future negotiations. The pound is well placed to extend its advance even after recent strong gains.

Shares in UK companies are also likely to surge when the London stock market opens in a couple of hours, particularly utility firms which could have faced nationalisation under Labour.

But the wider FTSE 100 could actually be hit by the stronger pound, as it will eat into the earnings of multinationals.

British politics isn’t the only issue dominating the market today. Trader are also digesting a breakthrough, of sorts in the US-China trade war.

US President Donald Trump has reportedly signed off on the terms of a plan that will avoid fresh tariffs being imposed on Chinese goods. Washington is said to have agreed to remove some tariffs, in return for Beijing buying more US farm goods.

Rumours of a deal drove Wall Street to a record high last night. European markets are expected to follow today.

The agenda

• 9:30am GMT: UK inflation expectations for the next 12 months
• 1.30pm GMT: US retail sales for November