Jeremy Corbyn

Take a look back at how the markets have reacted to past general elections and their preference becomes clear – not that it makes them right.

There have been three occasions since 1970 when the result was a surprise – February 1974, 1992 and 2015.

In 1974, opinion polls suggested that the Conservatives would win three per cent more of the vote than Labour – in reality, they gained just 0.6 per cent more votes. The following day sterling sunk.

In 1992 and 2015 opinion polls suggested a very close election – in reality, the Tories won and sterling jumped.

But maybe this is less about a preference for the Conservatives and more about a preference for stability.

The sharpest post-election fall in sterling came in 2010, when the opinion polls got it about right. We ended up with a coalition, for a few days after the election no one seemed to know what was going to happen.

Sterling climbed in 1979, too, when Mrs Thatcher was first elected.

But it fell in 2005, and 2001 when Labour won. In the second election of 1974, when Labour, under Harold Wilson, won a very narrow majority, sterling fell.

As for equities, they surged after the elections of 1992 – when John Major won – and fell sharply in 2010.

Frankly, for most of the other elections, the movement in equities was very modest.

Samuel Tombs, chief UK Economist at Pantheon Macroeconomics, which looked at the relationship between election results and market reaction said: “We are in a rare position, insofar as the Prime Minister's decision to call an election surprised markets. By contrast, elections in 2010 and 2015 had to be held on those dates, so markets did not move suddenly when parliament was dissolved. The fact that sterling appreciated by $0.03—more than after the Conservatives' surprise wins in 1992 and 2015—when Mrs May called the election on April 18 suggests that markets anticipate a landslide victory.

“The risks to sterling from the election, therefore, lie exclusively to the downside. Clearly, the Conservatives' colossal 17-point lead in the opinion polls means that markets wouldn't be spooked if there were a small shift in public opinion in the final weeks of the campaign. Investors likely would be indifferent between majorities of 75 and 150, for example, as the Prime Minister's power would be enhanced in both scenarios, and the risk that ardent Brexiteers in her party could force her to sever trade ties with EU would decline. Note that when the Conservatives increased their majority in 1983 but didn't obtain quite as large a share of the vote as the opinion polls suggested, sterling didn't respond at all.”