The pound surged against the dollar after an exit poll indicated that the Conservative Party has secured an 86-seat majority in the general election.
Sterling gained 3% to $1.35 – its highest level since May last year – on hopes that a big majority would remove uncertainty over Brexit.
The pound also jumped to a three-and-a-half-year high against the euro.
Prime Minister Boris Johnson has pledged to take the UK out of the European Union by 31 January.
The BBC’s economics editor, Faisal Islam, said a big win for the Conservatives pushed leaving the EU without a deal into the distance, and the financial markets are breathing a sigh of relief.
“The most disruptive form of no deal has been taken off the table. The market reaction is a reflection not just of the result, but of the fact that [a big majority] gives the prime minister room for manoeuvre.”
Capital Economics chief UK economist Paul Dales said: “If the Conservatives do win a majority, passing a Brexit divorce deal in the coming weeks would remove any risk of a no deal Brexit on 31 January, reduce the immediate uncertainty and lift business investment at least a bit.
“And in a Budget in February, the Conservatives would probably give the economy an extra kick by raising public investment by up to £20bn.
“Together with the removal of some risk of Labour’s anti-business policies, this explains why the pound has already risen from $1.31 to $1.34.”
The poll projected that Labour has lost 71 seats to 191.