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The UK election on Thursday ended with a hung government, forcing Prime Minister Theresa May to seek out alternatives in forming government ahead of crucial Brexit negotiations with Brussels.

How did the results of the UK election go?

The embattled Conservative party ended up with just 319 seats in the House of Commons, which is below the 326 needed to form a majority and well below it’s performance during the previous election under David Cameron. Meanwhile, the Labour party made huge inroads, gaining 29 sets to end with 261.

Nicola Sturgeon’s SNP was also dealt a major blow, finishing with only 35 seats. That’s 21 less than the previous election. The Liberal Democrats gained four seats, bringing their total to 12.[1]

The parties react to the UKeElection results

Prime Minister Theresa May appears to have reached an agreement with the Democratic Unionists that will allow her to form a government, according to various sources. Any deal to unite parties or form a coalition must be ratified by the Queen.[2]

The Democratic Unionist Party (DUP) is the largest political party in the Northern Island assembly.

“We want there to be a government,” a DUP source said, as quoted by The Guardian. “We have worked well with May. The alternative is intolerable. For as long as Corbyn leads Labour, we will ensure there’s a Tory PM.”[3]

The UK election affect on the market

A hung parliament sent the British pound tumbling on Friday. Sterling fell more than 1.6% to the mid-1.2750 U.S. region, its lowest since April. Analysts expect steeper losses for sterling in the coming weeks as the Conservatives scramble to form a government. According to Commerzbank, the GBP/USD exchange rate could be headed below 1.26 in relatively short order.[4]

The results of Thursday’s election were a major blow to the prime minister, who called for an early vote to strengthen her mandate in upcoming Brexit negotiations. Without a strong mandate, it’s unclear whether London will be able to negotiate a favorable exit package with the rest of the European Union (EU).

Theresa May officially triggered Article 50 of the Lisbon Treaty – the formal mechanism for leaving the EU – on 29 March. Both sides have two years to reach an agreement.

[1] BBC News. Election 2017 Results.

[2] Rajeev Syal and Henry McDonald (9 June 2017). “May reaches deal with DUP to form a government after shock election result.” The Guardian.

[3] Rajeev Syal and Henry McDonald (9 June 2017). “May reaches deal with DUP to form a government after shock election result.” The Guardian.

[4] Pablo Piovano (9 June 2017). “GBP/USD potential visit to the 1.258- region – Commerzbank.” FXStreet.

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