Sterling dived and the FTSE share index was set to fall 1% this morning after a shockingly bad election result for Prime Minister Theresa May plunged Britain into political chaos days before the start of Brexit talks.
The surprising result raises questions about how Britain will advance with its plan to leave the European Union, and whether any party can form a stable government.
As results emerged, the pound initially sank 2% against both the dollar and euro.
With May's ability to form a government uncertain for much of the night, the pound steadied in Asian trading before falling sharply again as London traders arrived at their desks around 5.30am.
By 5.30am, sterling was 1.5% lower on the day at $1.2753 - having fallen as low as $1.2693 - and 87.78 pence per euro.
A 1.5% drop is a big one-day move for the pound but currency traders have grown used to volatility where sterling is concerned.
In fact this is only the seventh biggest one-day fall for the pound over the past year.
Sterling fell 8% last June after the Brexit vote and tt dropped another 3% in a single day later that month.
Falls for sterling have tended to support London's internationally-focussed FTSE 100 blue chip index.
With trading volumes still extremely thin, official FTSE futures were up around 0.2%, having earlier fallen by a similar amount.
Analysts said that with initial exit polls pointing to the Tories losing seats and that Prime Minister May's early election gamble is not paying off, markets are pricing in a more complex outlook for policy implementation, including Brexit.
Investors' traditional views of whether the Conservatives or Labour would be good or bad for the pound, have been muddied in this election, not least by the prospect of Brexit talks due to start on June 19.
Some banks have said a high-spending Labour government could spur economic growth and cause the Bank of England to raise interest rates more quickly.
Some also argue that any Labour-led coalition might aim for a softer deal on Britain's planned departure from the European Union than the "hard Brexit" that markets have worried May would deliver.
